6 Keys to a Successful Garage Sale

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By Marianne Reid Anderson

If you have items that you no longer want or need, a garage sale is a great way to clean out your home and earn back some of the value of your items. Using the following keys to a successful garage sale will help you maximize your earning potential:

The More the Merrier – The larger the garage sale, the larger the crowd of shoppers; otherwise, you may end up with a lot of drive-by looker-on’s that don’t bother to park and peruse. So if you are arranging a garage sale, be sure and let friends and family know that they are welcome to bring items and then give them a certain area where they can setup. Just make sure that they are responsible for making their own sales because it is impossible to know how they might negotiate a price. You may also want to consider organizing your neighbors to all having a garage sale on the same day because multi-family and neighborhood garage sales always attract a large number of shoppers.

Garage Sale sign [Read more…]

History and Tradition: Thanksgiving and More – Is there anyone who doesn’t know the history of Thanksgiving? We are history rich in our country. Do you have knowledge of how mortgages came to be?

Mortgages can be traced back to England.  The concept made the trip on the Mayflower with the Pilgrims.  In fact, in colonial days and beyond, the typical transaction included putting 50 percent down on a piece of land or property, with the balance due in five years.   Of course, the values of homes were much lower then, but so were incomes.

  • When the Depression fell upon America, the source of funds for mortgages from banks was among the casualties of the times.  Banks had no money to lend and the mortgagors had no money to repay the lenders.
  • It wasn’t until after the Depression that the concept of monthly installment, or amortized payments came into being.  The Federal Housing Administration was created, and loans became insured.  Since the banks had insurance against the borrower defaulting, money became more available.  The 30-year loan became a reality, which provided the consumer with lower, affordable payments.

Prior to World War II, the Federal National Mortgage Association was created to provide liquidity – that is, mortgages were sold as securities, creating a secondary mortgage market.   This also aided the consumer in that rates and terms became more stable, rather than geographically sensitive. 

When the Baby Boomers came of age, the demand for housing skyrocketed, causing quite a housing boom.  Higher incomes, along with the two-income household became more common, and homes became more affordable, or a larger, more expensive home was purchased because the couple would qualify for the loan with both incomes. 

As time marched on, the American Dream was one that not all Americans could achieve, so the government began to encourage a wider range of loans, with less restrictive qualifying criteria.  Mortgage products became more “flamboyant,” and the onset of little or no documentation loans began.  These loans allowed the buyer to provide virtually no proof of employment, income, or assets, and offered a similar rate to the full documentation loans.  Also during this time, individuals who were credit challenged were offered loans that would allow them to purchase their home, often with a “reward” or lower interest rate if they continued to make payments on time for a pre-determined period of time.

Self-employed individuals were able to be approved (many write off a good bit of their income) with excellent credit, or just by showing bank statements to prove the levels of their gross income.  Deductions and business expenses were not considered in qualifying.

We all know what happened in 2007 and 2008 – the credit crisis hit not only mortgages, but also our entire economy.  Many economists are now saying that the recession is over, and has been.  However, the mortgage products available today are similar to those the country saw in the 1970s and 1980s, in that income, asset, and employment information are required on virtually every loan approved. 

Arguably, many of the loans were doomed to fail.  While this can be debated, it should also be noted that many of them did not fail, and many hard working individuals who otherwise may never have had the opportunity to own a home did achieve home ownership. 

 We have much to be thankful for this season – our country did not suffer the horrific economic set back in the first decade of this century that it saw in the 1930s, and while there is still much to be done on the employment and economic fronts, it is reassuring that we have come to a new normal in a short period of time. For those that want a new home, I encourage you to keep shopping, as there are great values out there. Happy Thanksgiving, and remember, “Your Home Loan Matters.” 

What is the Velocity of Money and How Does it Impact Home Loan Rates?

By Jacquelyn Brinker

If you’ve been watching the economic news, you’ve probably noticed that reports are chock full of information on the economy. Remember the phrase, “It’s the economy, Stupid?” Market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home. Who knew?

Here’s why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money.

With the job market still very sluggish, consumers aren’t spending much money these days, and businesses are still reluctant to spend money to make investments in their business. Most business owners are playing “wait and see”, and trying to preserve their assets rather than making investments in their businesses or considering expansion moves. With the present velocity at low levels, inflation remains subdued and that’s good for home loan rates. That’s because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, and it will, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen.

While we certainly want to see better economic recovery news and a decrease in the unemployment rate in the very near future, we have to remember that there’s an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.

As we’ve been saying for some time now, current home loan rates are at a historically low levels, but that situation won’t last forever. That continues to mean that now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to take advantage of historically low home loan rates, then please contact my office. We are here to help as always because, Your Home Loan Matters!