While overall home prices are dropping fast and furious, resales were up in October, which is good news for those selling their homes.

The basic lesson we can take away from all of this is that “trends” don’t really mean as much as what is actually happening in your area, with the kind of home you’re looking to buy or sell.

In some areas, home prices are still rising, while in other areas, they’re flat, and in yet other areas, they’ve been plunging.

It’s like not counting your chickens before they hatch. Watch what home markets in your area are actually doing.

In order to qualify for the best mortgage loan, it is important to know (and understand) your loan to value ratio.  This figure is calculated by dividing the balance of your mortgage by the worth (as verified by an appraisal) of your home.  The more equity you have in the property when refinancing, the lower your ratio and the better your interest rate.  Lower ratios essentially equal lower mortgage payments and more savings for you as a property owner. 

Alternatively, if the ratio is high it often flags as high risk to the lender.  High risk equals higher interest rates and higher loan fees.  It can even mean having to purchase alternative mortgage insurance which can be extremely costly to you with no personal benefits whatsoever in return for your payments.  The only thing PMI does is protect the lender — at your expense.   

Knowing your ratio and what it is doing to your refinancing package before you sign the papers could save you some cash. 

For the first time in 13 years, home prices are falling. This is Bad news for those getting ready to sell. If you have a lot of equity, now might be the best time to get it out and invest it in something stable and liquid with a real rate of return, rather than seeing your equity disappear with lower home prices.

However,  if you’re getting ready to buy your first home, falling home prices are great for you, and will allow you to buy more home, for the same money, than you might have gotten even a few months ago. You’ll definitely want to take advantage of falling prices if you’re currently looking for a home.

Whether this is good news for you or bad, it’s also a reminder to keep abreast of what’s going on in the housing market, as an owner or a prospective buyer.

As with everything, the concept of valuing homes has now gone internet with websites popping up that advertise their services to provide you with the value of your home based upon past sale prices within the geographical area, trends, this factor times that factor divided by a unknown factor point, blah blah blah.  You get the idea — and to this new trend of services, all I can say to this is Buyer BEWARE.  After looking around my neighborhood, and the neighborhoods of friends and relatives, I see a trend to over-price the values of the properties not just a little bit — but thousands and thousands of dollars.  If I were to sell my house in this very flat and somewhat sludgy market, and put it on for the more than $12,000 extra one of the sites told me I should, the property would more than likely never sell.  In my sister-in-law’ s neighborhood in Burbank, the site put a value on her home that was more then $75k higher than the one she was given just last month when it was placed on the market. 

Certainly, these service sites may have a good concept and purpose – and maybe they will improve in providing accurate information — eventually.  However, in the meantime, my advice to you is to find a local service provider who knows the intimacies associated with your location.  Selling a house in a fickle market is hard enough on its own, doing it with bad information as to asking price is just stupid.  It may cost a bit more to use someone local, but in the long run, it could cost you a whole lot less.

If you’ve ever owned a home in Australia, you might be familiar with mortgage accelerator loans. Now they’ve come to the U.S.

The way this works is, you deposit your paycheck into a special account. Every dime of it. Then, you use that account to pay your expenses, and every dime you don’t spend, goes to pay principle on your mortgage.

I’m not sure this is the best way to prepay a mortgage. I’m not even sure that prepaying a mortgage is really a good idea; I’ve been doing a lot of research on the topic and realize that prepaying does not protect you from foreclosure, where saving that money in a contingency fund could.

But that aside, if you want to prepay your mortgage, this is an interesting way of doing it.

A good friend of mine and a shrewd business professional was looking into refinancing to lock in a lower interest rate — which meant for the same amount of payment more was hitting the principal and less that ever ellusive interest cloud.  It made sense to me.  But, just as the deal was to close, the lender did something that made me wonder — how many others have had this happen?

At the 12th hour of the signing, the lender tried to change the terms of the loan — “to make it go through” he said.  “Not so,” she said.  My friend, because she is a business professional had not only an attorney assisting her with the transaction, but she had the first hand knowledge to recognize the scam that was being played out.  The lender was clearly trying to pad the deal with higher closing costs and some additional insurance for which he was a recommended broker.    He lost the deal — and he now has a complaint with the regulatory agencies to deal with.  When the complaint was made the agency said “This is unfortunately not an isolated incident that has been on the upswing with lenders dealing with single women and minority or elderly populations.  It is as common as online credit card scams.  It is a travesty.”

Not all lenders are bad, but there are those that can only be considered to be predators.  Predatory lending is illegal and unethical.  The predatory lenders relies on the borrowers ignorance and desperation to cloud their  judgment — that’s the only way the scheme will work.  Before you refinance, take time to educate yourself and/or hire a professional to protect your interests and ultimately your investment.   Do your homework and shop around.  Comparison shopping will identify patterns of what the true cost of the refinancing would/should be.  Last, try not to use refinancing as an escape from a bad situation — when desperation or emotions drive your business ventures, it becomes very hard to remain objective enough to protect the investment.  Never act upon something like a home lone or a refinance loan when you feel pressured or rushed.  Take your time, read the documents, do your homework, and protect your money and investment. 

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?