January 2009

Living together can often be a tough gig even for members of the same family. 

As a Realtor I am often privy to observations of many peoples’ lives.  We get to see inside the inner workings of the home.  You can tell a lot about peoples’ relations to one another and the world by their home setup.

One interesting Observation I have made as late is the existence of the man room.  One of the things that I learned early in my career in real estate is that contrary to the cliches about the king and his castle the home was clearly  the domain of the woman.

The Man Room is the final strong hold of the King that has been driven from his castle.  He has forfeited all rights to the rest of the home in hopes of defending one last room.  The final refuge if you will.  The vestige of Manly pride of years before.

A Female Realtor in our office describes the man room this way:  The man room is a place that smells like farts and BO.   A place where you can throw your underwear on the floor.  A place where a man can go back to his primitive caveman ways. 

I would describe it a little differently.  I would say the man room is a place where function rules above form.  Where asthetics take second fiddle to comfort.  The man room is designed for comfort and relaxation without regard for exhibition.

I shall close by saying to you brave men that hold down your fort.  Good Luck.  Don’t break the line. God Save the King.

Zen Dimension with Joel Garcia

A long day at work.

Find a chair that reclines way back.

Let the amber glow of the monitor wash through your soul.

Imbue a Bordeaux glass with Stella Artois.

Plot a course for LisaCarpenterPhoto.com.

Elect your collection of choice.

And Relax as the exotic songbird lulls you into the Zen Dimension .

I just got off the phone with one of my favorite Lenders and he just received an e-mail this morning that his bank is lowering the boom (or raising the bar) on construction loans. It looks like people trying to get this type of loan will have to do a lot more jumping through hoops now. This Lender will now only work with you if you are using a well known Builder and will now use actual value instead of appraised value. You will probably have to have a lot more of your own money in the pile now as well. The bottom line is you will probably be better off buying an existing property unless you have money to burn.

So you are looking to buy a new home and you are hearing about discount points.  Or you already know something about discount points and you think you have the answer.  Here is the mistake buyers often make is they base decisions on their past experience.  They don’t realize how fluid the mortgage market is.  The problem is more than likely their experience is take from their experience with very few real estate transactions.  What you need to understand about the real estate industry is that there are no timeless universal correct answers.  

The game of real estate changes dramatically year to year, month to month, and even week to week.  This is why you cannot rely on your own experience of the past.  You cannot rely on experience of others from their past.  You need to educate yourself the best you can with current information and find a Realtor that is honest and actively selling houses every month that can help guide you.

Discount points are pre-paid interest that change the interest rate you pay over the term of the loan.  Here is the question, “Are Discount Points a good Idea?”.  Well it depends.  First, let me tell you upfront I am writing this because Discount Points have become a much better idea in the past few months.  Why?  Well.  It is all just math.  How much is a Discount Point.  One point is equal to 1% of the loan amount, so if you have one point on $150,000.00 then you will pay $1500.00 at closing.   Take for example the following choice.  One loan has one discount point and an interest rate of 5% and the other has no discount point and a 6% interest rate which one do you want?  Well, let’s look at it.

You would calculate it this way.  First you figure out the difference.  With the loan up front you will pay $1500 at closing but your monthly payment will be $805.00(refer to chart from previous post).  With no points you will not have the $1500.00 at closing but with your interest rate at 6% your monthly mortgage payment will be $899.00(refer to chart).  So which is better?  Well it depends on how long you will be living in your new home.  With one you save $1500 but pay $94 more a month.  A simple calculation 1500/94=15.96, shows that if you are going to be there for more than 16 months you will be saving quite a bit money with the first choice of the discount point.  If you plan on moving in less than f16 months than you should choose the one with no points.

The difference a point makes in the actual interest rate will vary at different times.  In the current market the above example is about right.  You save a point on interest for every discount point.  Three years ago it was more like you save 3/8 of a point on interest for every discount point.  You can see the calculations would be very different.

This is just a very small part of understanding which is the best loan right now.  So again I would recommend that you do lot’s of homework and find a knowledgable Realtor.  Selecting the wrong loan could cost you thousands over the life of the loan.

Ask questions.  Don’t be shy.  Very few have a full understanding of all the complexities of the process.  Even the veterans we see that think they have it all down usually only have a working knowledge of the surface.

Just between you and me.  I think Lenders purposely try to make it complicated to make it easier to sell you a product that may be good for them but bad for you.  Don’t let this happen.  Knowledge is Power.