I was just reading that many people are spending more on housing now, with rising costs and interest rates, and this is causing them to put less away for retirement. Many people feel it’s a good tradeoff because they can use their home investment in retirement.

Uh… don’t bet on that.

The fact is, homes are not a good retirement investment vehicle. They’re not liquid enough, you can’t count on how much equity you’ll have, and owning your home outright is not nearly as good as having a solid retirement plan in place that covers ALL of your needs.

If you’re not sure how to plan for retirement, or how much is too much to be investing in housing each month, see a good financial planner.

Sometimes it seems like Home Equity Loans are the saving grace to all of life’s difficulties. Need to do some repairs? Need a bigger car? The media tells you that taking out a home equity loan is the easiest solution to your new financial needs. But, is it really? Remember a home equity loan doesn’t come free. There is the costs associated with closing, application fees, insurance fees, appraisal fees, the list goes on and on. Some lenders say they have no closing costs on home equity loans, but look carefully, they may just be hidden within the ever so slightly inflated interest rate.

Bottom line is that home equity loans can be a good way to access relatively small amounts of cash quickly. The loan is protected and usually the money is offered at a low interest. However, don’t get blinded by the ease of refinancing and take out more than you originally thought you needed. Lenders can be as slick and convincing when they try to sell you more than what you really need. Remember, when it comes to taking out a home equity loan this is YOUR money we are playing with here. The fees associated with it, and the prospect of having your home unsecured can make this a tenuous ordeal if your financial situation makes a sudden change. Borrow wisely and frugally, in the long run you will be glad you did.

One problem with the big housing bubble is that it’s much like the stock crash of 1929. People are borrowing against their homes, and eventually they’re going to find themselves strapped, about to lose said home, and prey for foreclosure “rescuers,” who in fact are out to separate the homeowner from their house. Two favorite ploys are to get the homeowner to sign over the house believing he’ll continue to live there as a renter and be able to buy it back, but the terms are so horrible, the homeowner loses completely. Another tactic is to have the homeowner sign papers to “bring the mortgage current.” These papers actually surrender the home to the scammers.

What to do if you’re facing foreclosure? First, dificult as this may be, talk to your mortgage company. You may well be able to renegotiate the mortgage or arrange payment that will not result in foreclosure.

If foreclosure is a definite, consider filing bankruptcy. As horrible as that is, losing your home, and everything you have in it, to a scammer would be one thousand times worse.

Lately, it would seem, the heartbeat that is driving the nation’s housing and real estate markets is starting to weaken. Realtors nationwide are noting that all the signs are starting to point to a slowing real estate market. What does this mean, exactly? Well, to some shrewd investors it can mean time to prepare for a dog-eat-dog market.  After all, everyone wants the best price and so, when the market starts to slow down, it would stand to reason that the prices will become more competitive. Or does it? So far, that doesn’t seem to be the case. Instead, the bigger markets which normally show signs of slowing early on, have such a contained amount of properties available that the competition of trying to get the best price is keeping prices higher instead of having them drop down. “There’s been a drop in sales volume, but not in prices,” states Pam Liebman, CEO of the Corcoran Group. 

Even cash offers do not seem to be moving the prices down – yet.  Currently, sellers are simply holding firm on their asking prices and riding out what they see as a small set back in the market.  So what does this mean to the average investor? Well, it can mean that although it is a bit early in the slow down for wholesale bargain hunters to reap the full benefits, it probably is not too early to start saving your pennies for that rainy day contingency.   Afterall Conventional Wisdom (is he related to Confucious?!?) states:  As markets being to dip nationally, chances for making a bargain buy should increase offering excellent investment opportunities.   Are you ready to make your move?

That’s the news from the New York Times a few days ago. ““People have literally picked up their house at the foundations and shook it upside down like a piggy bank,” said Ed Smith, chief executive of the Plaza Financial Group, a mortgage brokerage firm in La Mesa, Calif., near San Diego.” According to NYT’s November 3 article, many people, during the housing bubble, and continuing, have not only taken out loans on the equity in their homes, and spent that money, but also negotiated lower house payments, and spent that money, as well. Now, I understand that investing your home equity can be a good way to grow your wealth. But to squander it…it’s unimaginable to me, that people would borrow against their homes and blow the money, as if it came from the sky. But according to the Times of New York, that’s exactly what’s been happening. Fortunately, I wasn’t in the position to make a decision like that, but I hope I would have made the right decision.

It never fails.  Almost before you can put the key into the door of your new home, you get bombarded with offers of mortgage life insurance to pay off your debt should you meet an untimely demise.

Treat those offers like telemarketers or other junk mail.  Dispose of it immediately.

Most of those policies are exceptionally overpriced and they decrease in worth as you pay off your mortgage.  Certainly not worth the money you pay out, but insurance brokers know how to prey on the fears of the worst to sell you on these plans.

Instead of mortgage life insurance, your better option is to take out a regular life insurance policy that will not only meet the costs of your obligations, but allow your grieving family an income to live on while they cope with their loss.

Weighing your debt basically consists of figuring out what the average rate is you are paying.  This works great if you have a primary mortgage plus a HELOC (Home Equity Line of Credit) or a secondary mortgage. 

The first step is to add up your debt.  For example, you have a $200,000 primary mortgage at 5.875% and a HELOC with a balance of $100,000 with a rate of 7.25%.  Your total debt is $300,000.

The next step is to divide your primary mortgage of $200,000 by your total debt of $300,000.  This will produce .67, which you will then multiply by your primary mortgage rate of 5.875% which equals 3.94%.

The third step is to do the same process with your HELOC.  Divide $100,000 by $300,000 which will produce .33.  Multiply .33 by 7.25 and you get 2.39%.

Now, you will add  2.39 plus 3.94 and you get 6.33.  So, you are paying an average of 6.33% on both mortgages.

With the rise in interest rates, foreclosures are estimated to reach some 500,000 this year.  Money might be somewhat time, so now’s the time to act not later.  Avoid becoming a statistic.  Take what action you can to avoid the F word.  If you’re struggling to pay your mortgage, call your lender and ask for suggestions how you can preserve your home and still satisfy your obligations.  Take a good look at your bills; if there’s anything you can trim back, do so.  Honestly assess your outflow versus your income and decide if you may need to sell and downsize.  The trick here is to act early before the deluge of phone calls asking for payments strikes, or worse, foreclosure on your loan.  With a touch of preventative action, it can be avoided.

Can having a dog or cat (or any other pet) reduce the resale value of your home?  Well, first of all, let’s look at how many Americans actually own pets.  The American Pets Products Manufacterer’s Association says that 43 million households have dogs while almost 38 million households have cats.  That said, it’s very likely that the people who will be looking to buy your  house will be pet owners themselves as will other properties for sale at the same time as your home is for sale.  So, if you decide to get a pet, you won’t be alone!

That’s not to say you shouldn’t take certain precautions, though.  If you have a pet in your home, there are things you’ll want to do before putting your house on the market and before each showing of your home:

-Make sure you keep the house clean of pet hair.  Have the carpets and furniture professionally cleaned before putting your house on the market and dust and vacuum frequently.

-Repair any pet-related damage such as chewed on cabinets or stained carpet.

-Keep the animal out of the house during showings.  Whether you take the pet with your or put the pet in a kennel, you don’t want potential homebuyers being surprised by seeing an animal in your house.

As long as your house is in good condition and clean, the presence of a pet shouldn’t affect the value of your home.

Chase is expanding their interactive eSummit online training program to broker and correspondent home equity customers.  The eSummit holds presentations to help participants learn more about the products and features that are offered by Chase.  You are able to ask Chase experts questions online and receive live answers instantly.  The eSummits are held bi-monthly and allow Chase customers to learn of new and exciting news and new products from Chase.  

Chase is one of the leading home equity lenders in the United States.  They have generated more than $54 billion of home equity originations.  Chase works through banks, brokers, correspondents and mortgage offices.  The eSummits are available to customers on the Chase website under the Home Equity section.