Blog Somebody

As the owner of 2 properties that have temporarily frozen in  value, I too have decided to get rid of my teaser mortgages and so I have refinanced them and now I pay at least the full interest payments on my loans. I noticed that even with all of the recent crackdowns in the mortgage industry, Life still goes on. And we are not having a Real Estate bubble!

Homes are still being sold for more than the owners paid.

The profits are not as exagerated as they were 3 years ago, but I have the confidence that the market will continue to move up slowly perhaps at a 5% per year rate

But that could still make you 20 to 25 percent in less than 5 years time.

Now what is happening is that all of those Mickey Mouse Mortgage companies and brokers are going down. They used to approve anybody, using dirty tricks, fake pay stubs etc. Now I am glad that the Banks are cracking down on all of this Fraud. And the truth is that we all should make money honestly and this world would be a much happier place.

With today’s high tech world, I am constantly checking my online bank statements to see my balances and that way I can know exactly how much money, I have left, until my next paycheck. But while I was logging on, I found out something very distressing: One of my credit cards, which displays on my account summary page, suddenly it is showing some activity, which I do not have any knowledge of. So I immediately made a phone call to my bank, where I get transfered to the credit card fraud department.

The item in question was a balance transfer, using funds from my credit card to pay off the balance of another credit card from a bank that I do not even have any accounts with. And I always thought that you cannot do that. how can my bank let me pay off accounts for other people. Well in this case I did not do it and as usual the bank gives me a refund credit to my account and they also assured me that they will investigate this and a new card will be issued and mailed to me within 1 week.

I know most people would say ok, maybe this was a bank mistake and leave it up to the bank to solve it. But in my case I am still not satisfied. I want to know the name or account number that was payed and I want to call the credit card company and find out the persons address who did this.

It almost makes me want to pull a Jack Bauer, or in other words I would like to do a CIA or CTU style interrogation of the person who did this crime. Do you remember a recent scene, where jack interrogates his own brother, by putting a plastic bag over his head and asking him a few questions. I know other people may refer to this as mafia style. Well unless you are a liberal, in that case this would be considered a civil rights violation, because after all bad guys have the right to remain bad! Its not like in the old superhero cartoons, where justice must be served.

Anyway the bank refuses to give me this information, regarding the account name or account number, so I may have to hire a private eye, if it is even worth it. Add this to the fact that today, which is about 2 weeks later, I just found out that I had some more activity, and this time the crook has somehow used one of those courtesy checks that the banks always send you in the mail.

I continued to speak with the representative from the fraud department, and I asked them several questions, including: How is this possible?. By the time I ended my phone call, I am somewhat convinced that this person, who has now victimized me 2 times, must be stealing my mail.

So, I am now another victim of identity theft. I will now have the pleasure of calling the credit boroughs to flag my credit records. I also have one more reason to vote against those liberals and there stupid privacy protection laws, who are preventing me from finding and punishing this thief, looser or whatever other kind names we can think of. But do not worry, I will hire a private investigator and I’ll make sure he takes care of this person. I also encourage other victims to do the same.

If you leave it up to the bank, they usually do nothing, they wait about 30 days, and then they let some insurance pay for it. But that method encourages these bad people to do more evil.

Today I’ d like to discuss the controversial type of loan, which really is not so bad if you understand how it works. You probablly hear radio commercials about this.

Disclaimer: please not that I am explaining this as a consumer. So it is my advise that you consult with your bank of mortgage lendor for the exact details of this. This is only my single opinion about this. I like this loan. But there are also some people who have lost money, because of a lack of understanding of it. Always consult with a licenced lendor first, before you make any type of financial decissions.

Now here is my explaination of how this has worked for me:

As far as know: A true mortgage loan never has a 1 percent, 1.5 or 1.75 percent rate. So they call this a teasor rate for advertising purposes. Also this is only one option of payment when you use this type of loan. 

What you really get is a loan that is adjustable and it used the MTA or LIBOR index plus a margin of 2.75 percent. So the actual mortgage rate is currently at about 7.5 percent. This is actually pretty close to some regular fixed rates, but this is adjustable so it can go up or down each month.

When you apply for this loan and close: You are given a special option to pay a lower payment rate of lets say 1.5 percent of the interest only for a limited amount of years.

Afterwards you may have to make a higher payment. But this is usually after 5 years or more.

If the true interest rate is at 7.5 percent: Than the other 6 percent is it is actually taken away from your home equity each month. 

So you are actually creating some  negative equity with each payment.

And to explain this in another way you are given an option to make a much lower payment then you would if you had a regular mortgage. This is how some people are able to have super low mortgage payments. This works out excellent if you are in the business of buying homes and flipping them in 1 or 2 years. If you make a lot of equity gain, it will most probably ofset any losses.

Since the loan is called an option loan, you also have the option to make the full interest only payment or even a fully amortized payment. Sometimes they even give you an option to convert it over to a fixed rate. But you have to ask your bank or mortgage broker about this.

I have this type of loan and even though I may be creating some negative equity, my own home has increased in value by a much greater amount. I am also planning to start paying the full interest only payment later this year. Or I may sell my house and use my remaining equity to buy a smaller home for cash!

This is also an example of how you can leverage the banks money to build wealth via home equity much faster than you could ever save it in the bank.

Since this blog is not only about war and politics, which by the way gets boring after a while. I have decided to discuss something else.

In this case finance and loans. I have been hit hard by the Florida homeowners insurance increases and temporary peak in the real estate market. So I have to find additional ways to cut my expenses and so here is one way that I have found. 

Now that the prime rate is over 8.5 percent, You may be better off finding a loan that has a lower interest rate and it may ofset your tax savings.  So here is a prime example:

Last year my wife got a personal loan from a small savings bank that has a fixed rate of 5.5 percent and allows us to pat just interest only for 2 years. This loan is for $20,000 and the payment is about $85. At the same time I have a home equity line of credit for $50,000 and the interest only payment is $350.  So I find that the first loan I could increase it to $50 and the payment would be about $210 for 50K. So then if I can save $140 a month, who cares of the tax savings of less than $50 a month that you get on your income tax return. $210 is still better then $350 - 50 ($300)

This is only possible to do if you have a good credit score, but it is going to help me to save $90 each month.