Tag

underwater mortgage

"How much does that home rent for?"

How to Predict (House) Rental Rates Want to know the best predictor of what a given home rents for? Figure out when the owner bought. If they bought between 2004 and 2008 — especially if they didn’t put much down — they want an arm and a leg. Or more accurately, they need an arm...
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Strategic Default Double Standard

Business Decisions, Big and Small What happens to a homeowner who strategically defaults? (that is, they walk away from their home because it’s worth less than what they owe). Their credit is damaged — if not wrecked — for as long as seven years. What happens to a commercial property owner who strategically defaults? If...
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The Plight of the "Move-down Buyer"

Stuck in Place A healthy housing market functions like a gigantic escalator. The bottom rungs are occupied by first-time Buyers. As they purchase entry-level homes, the Sellers of those homes (“Move-up Buyers”) typically buy larger homes, enabling Sellers of those homes to buy even bigger homes. And so on, and so on. One of the...
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Selling Hurdles — Financial & Psychological

The Psychology of a Spurned Offer Sometimes, financial considerations prevent home owners from selling. If they owe more than their home is worth, they must either be able to write a check for the shortfall at closing, or, persuade their lender(s) to reduce the mortgage balance. However, such “underwater” home owners only account for a...
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Baby Boomers & Reverse Mortgages

Next Big Thing: Reverse Mortgages Take 80 million Baby Boomers fast closing in on retirement age, many of whom (still) have lots accumulated equity in their now too-big homes, and what do you get? A vast potential market for something called a reverse mortgage. Like its name suggests, in a reverse mortgage, the lender pays...
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Benjamin Franklin, Strategic Default, and Economic Recovery

Strategic Defaults Driving Retail Sales? A penny saved is a penny earned. –Benjamin Franklin, circa 1780 A penny defaulted on is a penny earned. –Benjamin Franklin, 2010?? No, I have no way of knowing whether a modern-day Benjamin Franklin would have uttered the second quote. In fact, he didn’t even say the first one (that...
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