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Cheat Sheet Q & A:
Topic: Underwater with a variable rate mortgage
Help! We’re another couple who is way underwater with our house, but with a twist that I don’t think I’ve heard you address yet on your show. We moved to
So, fast forward to now. We have no problem meeting out monthly mortgage payment since its interest only (we do pay extra toward the principal each month, too). Our interest rate is already at 2.75%. Since we’re so far underwater our bank will not refinance to a traditional mortgage unless we make up that $100K+ difference. Our concern is that, at some point, interest rates are going to skyrocket again, and if they go too high we might not be able to afford to stay in the place. And, more distressing at the moment for me, there’s some remodeling I’d really like to have done to make the house more “livable”, but we don’t want to sink another $35K or so into it under these circumstances. Is there ANY place we can go to refinance? Any advice is appreciated!
Bottom Line: You’re thinking is right on target. You’re doing all of the right things:
In the meantime you may find some slightly better news on the value of your home than you may realize. I’m commonly finding that Zillow’s values are commonly trailing the current market value for our local real-estate market by 10%+ So while you’re still likely underwater by a significant number, it’s likely to be less than what Zillow says.
So to your question… You are a perfect HARP 2.0 candidate. It was designed specifically for people in your type of situation (bought at the wrong time but have maintained current payments and want a better long term loan option without having to make up the underwater difference).
HARP loans have been extended until 2015 so you do have time to take advantage of the program. I know of multiple people that have been able to refi underwater mortgages in excess of 100k. I’ll email you contact info for two companies I recommend for mortgages who should be able to help you find a HARP 2.0 30 year fixed option.
If you have a topic or question you’d like me to address email me: email@example.com
What's the downside of the stock market?:
Bottom Line: So many did sell in May yesterday. Will they stay away? That clearly remains to be seen but I have been asked by several of my investment buddies what the downside of the stock market is after the rude May awaking yesterday. So… Here we go.
The best market barometer to use is the S&P 500. The best comparative metric to use to judge value is the ole’ PE (price – earnings) ratio. So…
The historic avg. PE ratio:
The current avg. PE ratio (as of yesterday’s close):
So… Let’s say that the market deflates back to its historic norms the downside in that scenario currently would be 21%. So should you expect that to happen? Most likely not as long as the Federal Reserve decides to keep the pedal to metal with QE and 0% interest rates. It is always good though to quantify risk before putting new money to work to ensure you’re comfortable with what the downside risk may be, so with that in mind, if you do put new money to work be prepared for a 21% loss if the worst case scenario.
Every member of Congress just got their own digital video platform:
Bottom Line: So I know just what you wanted more of. Members of Congress talking and available on demand right? Ok so maybe not but YouTube has started a service that’s pretty cool and could be pretty informative.
YouTube which has taken an active role in providing debates, key speeches and even candidate interaction with its users through it’s site over the previous two election cycles. They are now making that type of service a permanent fixture.
YouTube just enabled a channel for every member of Congress. So anytime a member of Congress has something to say… Well put it to video and post it on YouTube. No FCC restrictions, no filter, so you could see how this could get candid and potentially very interesting…
A big part of the value in the markets - international interest that's exploded:
Bottom Line: One of the biggest factors that keeps our stock market, housing market and even
Stocks and real-estate make up a great deal of the balance. Interest in stocks has increased 11% since 11% by foreign investors. In essence foreigners think that despite our issues – we’ll get it right.
Real unemployment rate:
Bottom Line: So what’s the real unemployment rate currently? The problem with the Government number is that it leaves out unemployed people looking for work once they exhaust unemployment benefits.
We’ll receive the official Government number tomorrow.
Decoding the Fed - what it means to you:
Bottom Line: The Fed’s latest policy announcement indicates the following:
In other words status quo on interest rates for at least the next six months.
Amazon takes a big digital leap forward for the blind:
Bottom Line: One more before we go today. Amazon is finally stepping up to the plate for the visually impaired. If you’re interested – click the link below: