Category: Housing

When to Refinance Made Stupid

Imagine that you did not know all you should about the ins and outs of mortgages. It is not that hard to do. Try. Now suppose you searched the web for a good place to learn about mortgages. A place where you could trust the NYTimesBldgByLuigiNovi-Nightscream source. Not some dumb blog. Someplace prestigious and maybe even a specialist on the topic.

How about the New York Times’ weekly Mortgages column? The Times is as august and authoritative as you can get in the old media world. And real estate has been an obsession for New Yorkers for as long as anybody can remember. (Rome has a foundation myth involving twin orphans and a wolf. New York’s centers on buying Manhattan really cheap. Tells you something.)

Vickie Elmer writes the column for the Times on mortgages every Sunday. It appears to be all she does there, and it is reasonable to suppose that it is her full time job. So she must be an expert. This must be the place for the confused to learn about mortgages.

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Are Timeshares a Good Idea?

Beach Yes. If you can arrange bridge financing, they are a great way to pay off the construction of your new resort. You will have to hire a sales staff and wait a few years to sell the full inventory, but when it is done you will have made a tidy profit.

What’s that? You meant is it a good idea for a consumer to buy a timeshare? Oh.

No. It isn’t.

I am reminded of this by a recent item at SmartMoney telling us how the prices for some second-hand timeshares, that is, those owned by consumers who now want out, have dropped to $1. They are not so much for sale as up for adoption, free to a good home. Given the annual fees involved, that is not as illogical as it might sound, but it is a stark contrast to the five figure sums those consumers were dazzled into paying just a few years ago.

 

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What Percent of Your Income to Spend on Rent

For Rent Crop- Infrogmation Yesterday the Wall Street Journal’s Developments blog (it covers real estate) carried a post Is Your Rent Too Damn High? inspired by a classic only-in-New-York character, Jimmy McMillan, the Rent is Too Damn High Party’s candidate for governor. The photo alone makes it worth the click.

The post muses, without resolution, on the eternal question of how high is too high.

Many personal finance experts say you should spend no more than 35% of your gross income on rent (not including renter’s insurance) whether you live in a high- or low-cost area. Of course, this amount can mean the difference between living in a studio on the outskirts of an expensive city or living large in a condo overlooking the beach in a low-cost area.

Many experts say this? It is the sort of faux wisdom that is often attributed to unnamed others and then passed on half-heartedly. I spent several minutes looking around the web for first hand advice on how much to budget on rent. I didn’t find much. There is lots of stuff out there on how big a mortgage you should take on, but relatively little discussion of renting. I guess renters just aren’t interested in personal finance.

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The Great Foreclosure Scandal

The other day The Wall Street Journal introduced me to a new word. From German, it is fremdschämen, meaning “a feeling of cringing embarrassment for the actions of others.” If only to discuss reality TV shows, English really needs NYS-Notary-Seal to adopt this one. We can spell it without the umlauts. It is pronounced something like FREM-shame-in.

I bring this up because there is a minor scandal brewing that has just inspired fremdschamen in me. The Consumerist has taken to calling it the Foreclosure Fracas. Wednesday’s update on it in The New York Times began:

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

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ING Sends a Postcard

I guess I should start out by stating that I do not find anything in this bit of junk mail to be the least confusing or misleading. Do you?

ING PostcardIn case you can’t read it, it is a postcard from ING pitching their “ING DIRECT 5/1 Orange Mortgage.” It lays out what the loan would cost as compared to an average 30 year fixed. Although it does not use the term “adjustable rate mortgage” or “ARM” it gives the reader plenty of clues, including calling it a 5/1 and breaking out the numbers into two periods, with the interest rate for the second (Year 6-30) period labeled as “projected.”

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