Real Thinkin’ - Ruidoso’s Real Estate Blog

Thanks for checking in here at the blog. We discuss everything Ruidoso real estate related, including periodic updates on the state of the market, home financing, foreclosures, the ins and out of both home buying and home selling and just about any other topic imaginable. Our goal is do not only educate and inform our readers about general real estate concepts but also to provide insights into the idiosyncratic nuances of real estate practice, unwritten rules and local customs in our unique Ruidoso resort market.  For our locals, most of you probably understand this but for those of our friends more used to a large urban metro, yes, things are a little bit different here as you’ll find. No better or worse mind you, just different. real thinkin' logo for ruidoso real estate blogImportantly, too, we’ll discuss the darker side of real estate. What’s that you say? We’ll the numbers side of real estate is the easy stuff. Whether its financing terms, tax code or assessing the market value of a home, the math side of things are pretty straightforward here in Ruidoso or around the country for that matter. Ahhh … but the emotional side, the darker side, of real estate is an all together different animal. Can you afford that home? Will you get the loan? Should you even make the purchase?  Are you rolling over for a buyer and lowering your price too much? Why isn’t your house selling? These questions will can create sleepless nights and churning stomachs and represent real issues for buyers and sellers which are every bit as relevant and important as the math side of our business. So feel free to comment away on any article, we love questions and feedback of all kind.

Dec. 13, 2019

Price Price Price is the New Mantra

The Ruidoso Real Estate Mantra has Changed! 

Over the last decade or so, a new real estate mantra is edging out the old favorite these days. Yes ‘Location, Location, Location’ still holds meaning. And it became cliche when discussing real estate demand and values. We all knew and understand this well tested maxim wherein identical properties will differ in value based on their locations. So location is still important but the newer mantra that is holding more sway with both Buyers and Sellers these days is ‘Price, Price Price’.

The downward trend of asset revaluation kicked off by the 2008 financial crisis made our Buyers hyper aware of price differentials existing from property to property as well as making them much more aggressive during negotiations than they had been prior to the bursting of the sub-prime mortgage bubble. Remember, these Buyers were often Sellers so they experienced this new pricing awareness form both sides of the fence. 

And Sellers always seem to be a quarter or two behind any valuation trends. Understandably we’re all reluctant to succumb to any downward pressure on home prices. Some of us just can’t stand the thought of losing a dime on our ‘investment’. Some of us can’t really get our minds around the fact that we compete on a comparative basis with every other similar home that is currently for sale. And some of us, well, we’re staring into the abyss and thinking we’re looking skyward, just certain that a huge pricing upward jump is right around the corner.

We’ve always been fortunate in Ruidoso. Our property values never erode as precipitously as in other micro-markets around the region and nationally. Nonetheless, all of us who are Sellers, must be reminded this is no longer 2005, or even  2006 or 2007. ‘Price, Price, Price’ is now the single most important factor is selling your home. More important than what it would cost to rebuild our homes, what we paid for them ourselves and what fantastic amenities, views and locations they possess.

Repeat after me ‘Price, Price Price’ … then repeat again.

Dec. 6, 2019

Wildfire's and their Aftermath Affect Ruidoso Home Values

Wildfire’s Impact on Real Estate

Probably the biggest impact to our market occurred in the immediate aftermath of the Little Bear Fire back in the Summer of 2012.  With the large number of homes partially or completely destroyed, our real estate market experienced a dramatic lull in sales activity. Some, in the path of destruction, we're never ready to move forward with their rebuild and others had inevitable delays with insurance claims. Many, who were looking to buy in the area before the fire hit delayed their purchase or looked elsewhere.  The natural beauty of our land was drastically altered in the burn area that the desire to move here could only decrease, at least in the short run.

As Ruidoso moved forward forward, displaced residents who rented sought new accommodations in other locales. They could ill afford to wait for rebuilding to have a home to rent again. And with our owners, insurance delays and and the time it takes to rebuild noticeably slowed normal real estate activity. Owners near and in the burn placed but not damaged by fire, will find fewer potential buyers interested in their homes. This increaseed the time on market and eventually eroded our property values to some degree. 

Premiums Up

Homeowner’s insurance is a localized product with every area subject to specific risks and having its own distinct loss history. During and immediately following the Little Bear Fire, some insurers stopped writing policies primarily because they didn’t want to insure an already damagea bit more in Ruidoso as loss ratios were finalized over the 2-4 years following the blaze. Premiums we pay are as much a look at future risk as they are an insurer’s attempt to recover losses from previous claims.  Any fire increases the potential of higher premiums as well as tougher underwriting standards in Ruidoso and similar communities. Some insurance companies may even begin to mandate loss control efforts like brush removal and new roofing materials before issuing policies.

Should You Stay or Should You Go?

Fire is unique with its devastation often quick and complete.  The post fire imagery in Ruidoso is still unsettling within our burn landscape. It’s a lingering reminder of the destruction which inevitably will be with us for years. The emotional and psychological impact on those who lost homes I’m certain is enormous. Some fought doggedly to rebuild and return to the life they had while others simply moved away from here never to return again.  It will take a while to predict the percentage of residents who return versus those who will leave but the scars from Little Bear will last and these includes those scars on our housing market.

Valuations and Taxes

Little Bear also had a lingering impact on our property taxes.  Should the County have reappraised the homes that were destroyed, providing a much-needed break to already stressed fire victims? It would have seemed a compassionate thing to do but would come at a price. Reappraisals at lower values would have our County taking in less money to provide nearly an identical amount of services.

Our budgets were already tight and shortfalls loomed around every corner. Lowering our tax revenue may actually have hurt our community more than it helped the people for whom it was intended. The County already experienced a tax impact from the properties that will not rebuild. Our tax collections decreased to some unknown extent. Immediate reappraising would only have accelerated this decrease. By some estimates, the values of just land decreased 50% or more in and around burn areas. With value a measurement inherent in supply and demand, the visual beauty of an area destroyed or damaged simply will have fewer people desiring it and values will come down.

We’ve took a hit back then that’s certain, but don’t think all is doom and gloom in our mountain paradise. Thousands still phone and email our real estate office with their dreams of mountain living intact. And many will come after them. Fire and its impacts are just now part of our physical and economic landscapes in which we choose to live.

Nov. 29, 2019

Quality Schools Impact Real Estate Values

Ruidoso Schools … Good or Bad they Impact Real Estate Values

Surf around the Internet a bit and you’ll see a host of studies which tie the quality of local public schools to real estate values in those school districts. But really, even without these studies, common sense alone would tell us this is the case. Can you imagine any young family with school age children not willing to pay a premium if they were able to so as to ensure their children could secure a quality public education?

Past grading of our Ruidoso Public Schools by the New Mexico Public Education Department can only be described as both dismal and discouraging. Our Middle and High Schools once eked out C’s while our Primary and Elementary Schools as well as our Early Childhood Center flat out failed about ten years back. Fortunately for Ruidoso, our schools have rebounded remarkably form those dismal lows. Where once the schools were a deterrent to moving here, they now serve as an enticement. Good Stuff!

But let’s get back to real estate and property values. Imagine you’re the parents of school age children. And your evaluating job offers in Ruidoso and a community whose schools score much higher than ours. Quite simply, all else being near equal, there’s not much of a choice is there? So poor schools have clearly reduced demand for property in this hypothetical situation. And when demand for our housing declines, well, you know the rest.

There are several studies, discoverable online, which indicate homeowners would experience a reduction of 2 to 10 percent of the value of their home should standardized test scores drop by 10 percent in public schools. Specifically, the Rand Corporation, a big non-profit, research and analysis, think tank type kind of an organization, cites studies that have found that a 1 percent higher average reading or math score in Chicago and Massachusetts was associated with a 1 percent higher property value.

Strong schools make strong communities and strong communities have unequivocally higher property values. Of course, quality education is important for a host of other reasons besides just increasing the value of our personal financial statements. But with this said, higher real estate values increase our tax base which in turn provides higher funding limits to the same schools which can enhance or devalue the real estate. The complex and symbiotic relationship of the many sectors of a community is represented well with this direct link between the quality of schools and value of real property.

Let’s all remember that vibrant, well educated communities have a very tangible impact on economic health. So whether or not you have children yourself, our schools still impact your personal wealth and the overall quality of our community as good schools play a vital role in attracting and retaining a quality workforce. Whether parents or retirees or a dedicated single, let’s all understand the economic impact of our school system and let’s plainly always demand better.

Nov. 22, 2019

Boy Oh Boy is this Appraisal Low :(

When your Ruidoso Appraisal is not what you Expected

An appraisal of $185,000? … boy oh boy that’s low. And you were convinced from your market research that your home was worth every last dime of the $205,000 to which the buyers agreed. And now your real estate broker is telling you that the purchase and sale may not occur. As a seller, you’ve just been broadsided by a low appraisal now learning the agreed upon sales price with your prospective purchaser is substantially higher than your property may actually be worth. At this point, most Sellers contract a severe case of the ‘never gunna’ sell blues’ as they wonder what happens next. And if you’re the prospective buyer, this figure means that the amount you’re lender will finance on the purchase is going be lower than everyone involved expected. And also as a buyer, you should interpret an appraisal value considerably lower than what you have offered as a big flashing red light, a heads ups you may be on your way to paying too much for a property.

Is the deal over? Is it time for either party to panic and throw in the towel? Can anything be done to save this purchase and sale?

Stop. Sit down. Take a deep breath. Then, whether you’re the Buyer or the Seller, get with your Real Estate Broker and try and determine what factors may have contributed to the lower than expected appraisal. As a Seller, was it due to factors that you as homeowner can correct? Items like obvious repairs and neglected maintenance or cleanup which you may consider remedying. If this is the case, you may be able to get the work done and ask the appraiser (very nicely I’d recommend) to take a second look and adjust the appraisal as they may see fit.

Though the Buyer’s lender typically requires and orders the appraisal, you, as Seller, always have the option to order another appraisal. This is a particularly good idea to pursue if you find out the original appraiser is just recently licensed or hired from another area so may be unfamiliar with the area where you’re property is situated. If you take this route, you should still make sure the appraiser is on the Buyer’s lender’s approved list of appraisers. Its possible that a second appraisal will uncover mistakes the first appraiser made. But there are no guarantees and, if when all is said and done, you still believe that the appraisal is just not accurate, and the appraiser is no longer returning your phone calls, you can always file a complaint with the New Mexico Department of Regulation and Licensing. I don’t recommend unless the appraiser is behaving as if they're from another universe. It won’t save your deal. But it may put a little balm on your wound if you find some satisfaction there and that’s important to you.

From the lender's standpoint, unless the original appraiser readjusts or the parties agree a second appraisal is more accurate, the mortgage transaction is dead in the water. So, as a Seller, you might simply lower the Purchase Agreement price to match the lenders numbers. As a Buyer, if you still want to move forward, you may carry a second mortgage with the Seller to make up the difference. You may consider just upping your cash down payment to make up the difference.

So, you see there are outcomes that can still be favorable even when the appraiser rains on your parade. Think creatively as a problem solver and its possible both Buyer and Seller can negotiate compromises that will make the lender move forward. If, after exploring all possibilities, you still can’t come to terms with the other party; contract termination is inevitable. 

 

Nov. 15, 2019

Buying a House versus Selling a Home

You’re Selling a Home to Someone Buying a House

Our homes are very special places. Nothing compares to the sense of peace, comfort, safety and security which a home filled with love brings. Often, when there’s a moment of quiet in my own Ruidoso home, the memories of family and friends, both two and four legged, seem to ooze from every room, swirling around me, ethereal spirits bringing smiles and contentment. These are, indeed, very special places the values of which are seemingly not easy to quantify.

But as our domestic situations evolve and we decide reluctantly or willfully to sell these special places, it is just that, quantifying the value of your home, which will be forefront in any buyer’s mind. These wonderful refuges, filled with our lives over all these years will now be measured, inspected, compared, criticized and com-modified. Ouch. Yep, we need to realize that buyers, when in the evaluation phase of a prospective purchase, will never look at our homes as nothing more than a house, an assemblage of wood, tile, metal and other mechanical systems. To them, these heartless bidders on your past, your memories remain mainly invisible and those that can be seen … a photo of your child’s graduation, your college diploma, an autographed football … are merely distractions and reminders that there are interlopers, trespassers living in this place which they want to make their home. You can almost see the battle lines being drawn … SELLER’S SWEET, PRECIOUS MEMORIES vs. BUYER’S CALLOUSNESS! It’s a very real schism which can exist between the parties. It’s difficult for us as sellers to not only emotionally detach ourselves from our homes and the memories which they exude but also not recall all those special construction projects in which we engaged, all those custom benefits that our places have which others don’t and, of course, all those dollars we pumped, dumped or lumped into our real estate. 

As sellers, we probably need to spend a few miles in the buyer’s moccasins to get realistic about our property value, anticipated time on market and improvements required which may be pointed out during a post purchase agreement home inspection. We all know that buyers aren’t really unfeeling, callous property buying bots focused singularly on ripping your vision of your home to shreds. Our perspectives simply rotate 180 degrees when were buying versus selling. As buyers, we’re all out there simply comparative shopping, weighing the pros and cons of one property versus another, looking at these structures, which we call houses, as commodities each with calculable and assignable values.

We sellers need to keep this awareness of the buyer’s perspective front and center when we list our properties for sale and then remind ourselves again when we enter into price negotiations. This will help us ensure we price our property accurately relative to current market sales, lessen the potential anguish we may experience when your listing languishes on the market, low offers finally arrive and inspectors’ reports describe for buyers a litany of problems with your ‘home.

Not too worry though; you’ll be the buyer next time!

Nov. 8, 2019

Is this Right Time for Ruidoso First Time Buyers

Time for Ruidoso First Home Buyers?  Or Time to Wait?

The last decade in the housing market has been, if not scary, downright terrifying at tmes. Sky high valuations, followed by precipitous crashes followed by steadily rising value. Value which now almost seem high enough again to warn of a crash. Is it over? Is their real light at the end of this tunnel or is what we’re seeing currently only a mirage, some illusory reflection from yesterday’s (the 1980s and 1909s ) heyday? So the real question becomes should a first time buyer jump in the pool or will the waters begin to cool.

At first glance, the answer is assuredly yes what with mortgage rates near historic lows and no clear signs that we've reached a market top.  And with these two factors as they are, as a percentage of income your monthly mortgage may still be near the lowest it will be in some time ... as in decades. But there are still some out there that insist home values will take a big drop in the near term. These less than cheery folks insist that their is real bottom ahead.

Well who really knows for sure? Probably neither side. We do see evidence around the Country and here in Ruidoso that investors are still returning to the market. This may be an indication to those new buyers who wait much longer that they may miss a good and  buying opportunity. And, as a first time buyer, you avoided the hit of any past dip so why not jump in while relative affordability is at this current peak? Let’s face it first time buyers. You are going to have to live somewhere and a roof over your head in all types of economic times is still a good thing. And, time is on your side. Even if you do jump into the market today and we experience another drop of say twenty percent, you’ve the time to ride it back up and recover all while enjoying the many positives associated with home ownership. 

I’m not trying to be Pollyannish my friends. There are some indicators out there that can be interpreted to portend an episode of home devaluations.  With the complexity of our national economy and its interdependence with global markets, market timing is difficult, if not impossible. Think of home ownership not necessarily as a great and always appreciating investment but rather as a quality of life issue. And how long are you willing live in your parent’s basement or put up with rental housing. Time is on your side. So be cautious but also be proactive with your life choices.

Nov. 1, 2019

Self Directed IRA Can Cure the Stock Market Blues

Unsettling to have your entire IRA invested in the Stock Market?

Though our stock and bond markets have experienced a fairly healthy recovery from their precipitous drops in late 2008 through the first quarter or so of 2009, you may still be getting those persistent feelings of sadness while reviewing your monthly IRA statements.  Yep, staring right back at you from inside the torn envelope is the realization that, over the past ten years or so you're retirement accounts may have not had the major moves into the black for which you hoped. And really, it’s challenging to hit your retirement goals when most stock portfolios sit today at a value fairly close to that which they were in 2005.

So is time to consider something other than stocks and bonds in your IRA portfolio? Well, how about a nice money market account paying something less than a percent annually in interest? Nope, that wouldn’t seem to be the answer either. Anything else out there to consider you ask? 

YES! Drum roll maestro please!  

Historically real estate has been a good investment and though it may trail the overall return of the stock market, when you add the income you can drive above and beyond the asset appreciation ... well I LIKE IT! So may its time to buy something with doors, windows and a roof if you have a ten year horizon or so. And the mechanism known as the IRA real estate trust or Self Directed IRA offers the perfect vehicle to effectuate the purchase. Just like you can keep cash, stocks or bonds in an Investment Retirement Account, either Traditional or Roth, your IRA real estate trust account can actually own any type of real estate whether residential, commercial or land and other categories. The trust will actually own the property and all expenses are paid by and all profits are returned to the trust.  Why not buy a rent house with your IRA. The trust pays for the purchase in cash so without the costs of finance the rent earned is pure profit above your taxes and insurance. 

Consider a house purchased for $150K and rented for $1100.00 a month. Subtract insurance and taxes combined at approximately $2500.00 and outside of maintenance costs paid by the trust, this investment would gather a 7 percent annual gain.  And considering this projected return does not consider any property appreciation, the time may just be right to consider Ruidoso real estate in your IRA. 

Oct. 25, 2019

Selling Your Ruidoso Business

Sellin’ the Ruidoso Family Farm for Fun and Profit!

Is it time to sell the farm? Are you bored and uninspired running your Ruidoso area business? Maybe you're just tired of being a slave to the business you created? Has age or poor health caught up on you and you’re not delivering the goods like a decade earlier? Whatever the reason(s), when it is time to sell make sure you're ducks are aligned properly prior to sticking that ‘for sale’ on the front door.  

Here are a few things to contemplate about preparing for the process;

Get Ready to Sell at Your Ribbon Cutting.

Not literally of course, but you should start creating credible, provable value in your business from day one. This means you don’t ask your second cousin who spent two years in the pokey for counterfeiting to scribble down your P&Ls on the back of a cereal box. Keep meticulous books, establish a working partnership with a community bank and hire a CPA to prepare your annual taxes based on those aforementioned meticulously maintained books.  Not only will this approach place you in position to sell your business more quickly and at higher value, you’ll have a lot less sleepless nights than the business owner who doesn’t heed this advice.   

Answering the Door When the Tax Man Knocketh.

Yep, back to the CPA recommendation.  It may seem, at times, an additional expense your fledgling or struggling business cannot absorb. Find a way though, as nothing will convince a prospective purchaser that your numbers are legit and your business is real more than CPA prepared tax returns. End of story. We're fortunate here in Ruidoso as we've some very good tax professionals that have tons of experience in small business tax accounting.

Hidin’ Your Stash of Cash from Uncle Sugar. 

Your relationships with state and federal taxing authorities are yours and yours alone to define. Keep in mind though, if you’re inclined to stuff your pockets with the green stuff as an income tax reduction strategy, it will negatively impact your business valuation. Sure, you can nod and wink at your business’ prospective purchaser as you intimate you’re pullin’ out gobs of cash from the drawer every night. But see if they pay you for it when they make their offer.  So go ahead a work a little sleight of hand on your Uncle Sugar. You may feel clever avoiding some income tax, but you’ll pay a price later when you’re ready to sell. Oh, and by the way, it’s illegal.

The Right Broker – the Right Valuation

Yeah we know your Mom’s Bridge partner just got her real estate license. And before this she worked as a billing clerk at the electric company. A noble profession certainly, but is this really the type of background that will prepare someone to place a sale-able value on and successfully represent the sale of your business? NO! C’mon folks you don’t see a proctologist when you need eye surgery (I think that’s actually a set up for an joke I heard once, but that’s for another day.) Take the time to find the right professional to represent your sale. An individual who has specific experience, specialized training or who simply ‘really gets it’.   

Inventory, Cash Flow, Goodwill, Trade Name, FF& E ... What are We Really Sellin’ Anyway?

There are lots of aspects to your business. You have cash flow and annual profits, you have a valuable customer list, you have your community reputation and the repeat business this generates and you may have an inventory sale-able items or parts. And then there are the desks, chairs, lamps, machinery, vehicles, computers, phones and on and on with all the stuff you need and use to make, do or run your business commonly referred to as FF&E or furniture, fixtures and equipment.  When you’re ready to go, sit down and think through these different aspects of your business thoroughly and really determine and define just what it is that you’re selling. 

Then find a good Broker.

Oct. 18, 2019

Refinancing Basics for your Ruidoso Property

Mortgage Refinancing 101

In recent years, millions of homeowners, including many in Ruidoso, have taken advantage of low rates and refinanced their mortgages. This article describes the advantages and possible pitfalls associated with a "refi."

Before You Start:

Remember that refinancing to reduce debt can be a smart move, but refinancing in order to borrow more for consumer purchases (car, vacation, etc.) could set you back significantly. Read the fine print on your current mortgage to learn whether you'll be assessed penalties or fees for "getting out" of that loan early. Make sure you know whether you have a fixed or variable interest rate and what the terms are.

Home Refinancing Basics

In recent years, Americans seeking to take advantage of low interest rates have lined up to refinance their mortgages. In fact, refinancing hit an all-time high in 2003, and remained high in both 2004 and 2005, according to the Mortgage Bankers Association of America. But while it's true that refinancing has the potential to help you reduce the costs associated with borrowing money to own a home, it is not necessarily a strategy that makes sense for every individual in every situation. So before you make a commitment to refinance your mortgage, it's important to do your homework and determine whether such a move is the right one for you. 

To Refinance or Not

The old and arbitrary rule of thumb said that a refi only makes sense if you can lower your interest rate by at least two percentage points for example, from 9 percent to 7 percent. But what really matters is how long it will take you to break even and whether you plan to stay in your home that long. In other words, make sure you understand - and are comfortable with - the amount of time it will take for your overall savings to compensate for the cost of the refinancing. Consider this: If you had a $200,000 30-year mortgage with an 8 percent interest rate, your monthly payment would be $1,468. If you refinanced at 6 percent, your new monthly payment would be $1,199, a savings of $269 per month. Assuming that your new closing costs amounted to $2,000, it would take eight months to break even. ($269 x 8 = $2,152). If you planned to stay in your home for at least eight more months, then a refi would be appropriate under these conditions. If you planned to sell the house before then, you might not want to bother refinancing. (See below for additional examples.) 

Remember: All Mortgages Are Not Created Equal

Don't make the mistake of choosing a mortgage based only on its stated annual percentage rate (APR), because there are a variety of other important variables to consider, such as:

The term of the mortgage - This describes the amount of time it will take you to pay off the loan's principal and interest. Although short-term mortgages typically offer lower interest rates than long-term mortgages, they usually involve higher monthly payments. On the other hand, they can result in significantly reduced interest costs over time. 

The variability of the interest rate - There are two basic types of mortgages: those with "fixed" (i.e., unchanging) interest rates and those with variable rates, which can change after a predetermined amount of time has passed, such as one year or five years. While an adjustable-rate mortgage (ARM) usually offers a lower introductory rate than a fixed-rate mortgage with a comparable term, the ARM's rate could jump in the future if interest rates rise. If you plan to stay in your home for a long time, it may make sense to opt for the predictability and security of a fixed rate, whereas an ARM might make sense if you plan to sell before its rate is allowed to go up. Also keep in mind that interest rates hovered near historical lows in recent years and are more likely to increase than decrease over time. Points - Points (also known as "origination fees" or "discount fees") are fees that you pay to a lender or broker when you close the deal. While a "no-cost" or "zero points" mortgage does not carry this up-front cost, it could prove to be more expensive if the lender charges a higher interest rate instead. So you'll need to determine whether the savings from a lower rate justify the added costs of paying points. (One point is equal to one percent of the loan's value.) 

Stick With What You Know?

Finally, keep in mind that your current lender may make it easier and cheaper to refinance than another lender would. That's because your current lender is likely to have all of your important financial information on hand already, which reduces the time and resources necessary to process your application. But don't let that be your only consideration. To make a well-informed, confident decision you'll need to shop around, crunch the numbers, and ask plenty of questions.

Summary:

  • The decision to refinance should only be made if the long-term savings outweigh the initial expenses. To calculate your break-even point, divide the cost of the refi by your monthly savings. The resulting figure represents the number of months you will need to stay in the home to make the strategy work.
  • Don't select a new mortgage based only on its annual percentage rate.
  • Also evaluate the term of the loan, whether the interest rate is fixed or variable, and the relative merits of paying up-front fees in exchange for a lower rate. 
  • Your current lender already knows you and has your financial information on file, so you may be able to get a better deal that way, instead of going to a new lender. 
  • To get the best possible refinancing deal, you'll need to shop around, crunch some numbers, and ask a lot of questions.

Checklist:

  • Shop around and conduct a detailed cost assessment (with a financial professional, if necessary) to identify which mortgage offers the greatest financial benefits. 
  • Read the entire contract before signing. Don't let anyone pressure you or rush you to make a hasty decision. 
  • If refinancing results in lower monthly payments, use those savings to pursue other important goals, such as preparing for retirement and college costs.
Posted in Home Financing
Oct. 11, 2019

Foreclosure is Sometimes the Best Choice

Foreclosures Happen

Walking away from any mortgage obligation is rarely pleasant. But if you’re looking down the path this year and cannot envision any situation where you’ll be able to avoid foreclosure, get out as quickly as possible as the pain, psychically and credit-wise of losing your home may become even more painful.

Now here’s the DISCLAIMER: I’m not encouraging anyone to default on their mortgage if they’re simply a bit upside down on their equity to debt relationship and still able to make the payment. Hang tough, home prices will eventually rise as they always have as compared to the dollar value with which you purchased your home and you’ll get upright again. So don’t rush for the door simply to avoid a multiple year struggle to right your ship.  So, if you have fairly dependable income and you can comfortably make the monthlies without serving your family Ramen noodles every night of the year, you can make it through the equity squeeze you've been experiencing. Don’t even consider choosing foreclosure.

But if you're fairly certain after completing our soul searching that because of your cash flow situation you’ll be foreclosed upon in the next twelve to 18 months or so, it may behoove you to act decisively and pull the trigger on the process. There are multiple reasons which may have placed you in this position. The market could have turned recessionary devaluing homes; you may have lost that plumb job with a great salary and just are not able to replace it; Maybe your two income family has become a one earner enterprise due to death or divorce; And lastly, maybe with easy credit you were doing cash out refinances a bit too aggressively so little equity was left in your property. 

Regardless of the reason, just pull off the bandage sooner rather than later and commence the financial healing process.

Posted in Foreclosures