July :: SoundBiteBlog.com 2007 :: SoundBiteBlog.com

Accidents happen! Many times, it’s not a matter of our driving ability, or the lack thereof. It can simply be the result of being in the ‘wrong’ place at the ‘wrong’ time. But it happens. Even to the best of drivers.

Like most of you, I don’t have time to shop around, get various quotes, and compare prices. I want someone I can trust, to do the work right the first time, finish the work when they say they will, and at a price that won’t wipe out my bank account.

Fortunately for me, I recently found an excellent local source – Olympic Auto Body, on Chico Way in Bremerton, WA.

My wife drives the Mercedes (I’m still trying to figure out the fairness in that?) and the front bumper had come loose. Normally, you have to go to the Mercedes dealer for such things, but I didn’t feel like driving clear over to Fife, or taking out a 2nd mortgage on my house. So I asked Brian Siemens, my good friend at Town & County Auto Repair, who he would recommend. And he suggested the guys over at Olympic Auto Body.

Around this same time, my oldest son, Ben, decided to trim some of the trees lining our driveway with the sideview mirror on my Ford Expedition. Score – Tree 1, Ford 0. The thought occured to me, ”I wonder if the boys down at Olympic Auto Body are running a “2-for-1″ special?”

I always enjoy it when I encounter great local business experiences like this. I met the owner, Dan Leger, and he was genuinely friendly & helpful. He gave me several options on my mirror mishap, all which were well below what the dealer had quoted me. As we waited for the part to arrive, he fixed my wife’s ‘Benz’ good as new in just a day. I swapped him for the Ford, and the new mirror was replaced the following day. Prompt service, excellent workmanship, affordable prices. What more can you ask for?

If you find yourself in a fender bender, entrust all of your auto body repairs to Dan and the guys at Olympic Auto Body!

Olympic Auto Body, 2181 Chico Way NW, Bremerton, WA 98312 (360) 479-6571 

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Real Estate Market Report/Conditions for Kitsap County WA for 07/10/2007

The following is a quick analysis of the combined single-family home and condo market within Kitsap County, Washington, provided by Rich Jacobson of Windermere Real Estate, in Silverdale, WA.

• Properties currently active on the market: 2097  
• Properties closed in the last 180 days: 1562
• Average Sales Price: $305,732
• Average List Price: $310,120
• Ratio of List Price to Sales Price: 99%
• Average Days on Market: 89 days
• Sales Pending this Week: 44

Current Market Conditions: Have you ever seen molasses going uphill on a cold day? Well, that would pretty much describe the real estate market here on the Kitsap Peninsula (okay, it may not actually be THAT slow, but it sures seems like it at times!) Inventory levels continue to increase, though demand has remained constant. The pendulum has not swung over completely to a Buyer’s Market, but it’s definitely past the halfway mark. If you’re a Seller, you better be prepared to pull out all the stops in order to achieve success in selling your home. Here’s a couple of quick tips:

• Conduct a pre-sale home inspection. Anticipate and correct any problem issues ahead of time.
• If you’re on a septic, go ahead and have it pumped and inspected. Place of copy of the receipt and inspection results in the Home Book.
• Depending on the age of your home, offer a Home Warranty Plan to prospective Buyers.
• Consider having your home staged or hire a staging consult to give you some suggestions.
• Price your home agressively.

One of the best values on the market right now is my listing on Franklin Street in East Bremerton. Give me a call to schedule a private showing @ 360.440.4758

For additional information and resources concerning real estate and living in Kitsap County, Washington, access my comprehensive website, www.KitsapLife.com.

another quality consumer article by Sparky

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This is America where the Need for Speed is ingrained from childhood. As children, we want faster bikes and faster Playstations. In our teen years, it’s faster cars and faster computers. And, as adults we want faster promotions, quicker increases in our credit limits and quicker pay raises. Eventually, we all have a day when we decide what we want more than anything else is Faster Equity Accumulation in our home!

The Good

Enter Equity Acceleration Programs. These programs are a masterpiece of marketing. They target the American need for speed promising to shave years off your mortgage and saving you tens of thousands of dollars in the meantime. Both of these goals are worthwhile. And there is nothing wrong with effective advertising. This article is not meant to imply that Equity Acceleration Programs are all bad. They are not all bad. They are poorly explained and even more poorly understood. As with many of the articles on SoundBiteBlog, this article’s intent is to explain the risks (yes, there are significant risks) and expose that the average consumer can accomplish the same goals in the same amount of time, for less money by avoiding the most heavily promoted Acceleration Programs available today. In short, the goals are worthy, the sales pitch is suspect.

The Bad

Equity Acceleration Programs are often explained in a misleading fashion. Rarely is a consumer told boldly that they are trading their nice, safe fixed rate first mortgage for an Adjustable Rate Line of Credit! The reason for this deception is obvious. It’s old news that interest rates are rising. It’s old news that they are expected to continue to rise in the near future. This old news causes anxiety in many borrowers and because of that anxiety, many loan originators are glossing over the part about an Adjustable Rate, preferring to concentrate most of their explanation on the exciting prospect of paying off a loan in a shorter period of time regardless of how it is done.

Fuzzy math seems to play a big part in an Equity Acceleration presentation. I have listened to two of these presentations in the last couple of months. The more aggressive presentation spent considerable time attempting to convince me that my (imaginary) 6.125% Fixed Rate Mortgage, was actually costing me 65%! My questions about interest rates vs. A.P.R. and how RESPA regulations affect us all, were quickly bypassed and never answered. Shock tactics are normal from what I can see.

The realities of these programs are these. You are going to trade your current mortgage (often an attractive fixed rate) for a new Line of Credit (also a mortgage) with an adjustable rate. You will then “deposit” your entire pay check into this “account” each pay period. Payment of all your normal bills is made from the “account” as you would normally pay them. Presto, abracadabra and your new mortgage will pay off years earlier than it would have! This mathematical magic was explained to me as follows. When you deposit your paycheck, you are temporarily reducing your mortgage balance. This temporary reduction reduces the amount of interest that is charged thereby making a drastic change in the overall amount of interest that accumulates on the loan.

The first flaw in the sales presentation for Equity Acceleration Programs is the fact they ignore how most of us pay our bills. Like my mother taught me to years ago, I pay my bills first on payday along with making my deposit to savings. The result of paying my bills immediately is that my new mortgage is only “temporarily reduced” for a very temporary time indeed. The amount of interest saved by reducing my mortgage balance by a few thousand dollars for 2 days is pretty insignificant. AND I had to trade my fixed rate mortgage for an adjustable rate to do it! The positive effect is more than offset by that fact as soon as interest rates rise and my new mortgage rises with them.

Another flaw is that because this is not an actual depository account, you will never be able to earn interest on your deposits. Remember, it’s a line of credit (a debt) not a savings account or a checking account that pays interest. Therefore, money that you could have accumulated by using the same theory with your existing accounts will be lost.

And the final flaw in these presentations becomes apparent when you consider how long it will take to recapture the cost of the new loan itself. You didn’t think these were loans without fees did you? No, like every other mortgage you have applied for, there are fees involved. Someone will need to appraise the home. Someone will need to do a Title Search and approve Title Insurance. And the list goes on. Each service includes a fee. All the normal mortgage fees will apply and they will add up to thousands of dollars. It will take a long time to save enough with the new mortgage to simply break even after these fees.

The Ugly

The biggest advantage to many Equity Acceleration Programs is to the Lender and the Loan Officer. Let’s be pragmatic for a moment. When was the last time you saw anyone advertising anything they were not going to profit from? These programs are no different. The Lender will be make a profit on each and every one and the Loan Originator will be paid for finding another client. There is nothing inherently wrong with that. Each time I have applied for a new mortgage, I knew that Loan Officer would get paid and the Lender would make a profit. Don’t forget, this is just another mortgage and it works like all the others. Loan Originators do not work for free. Lenders work for a profit. The market has gotten very difficult for Loan Originators and many are looking for new, creative ways to generate new loans. Lenders are rolling out “new” creative loan programs and dusting off old ones.

Caveat Emptor, “let the buyer beware”, is a phrase to keep in mind if you are tempted by a good sales pitch. Remember, you are buying a product. You may have just heard about the best product, or you may have just heard the best sales presentation.

The Do-It-Yourself Equity Accelaration Program

If you spend lots of time with a calculator in your hand like I do (occupational hazard), you get in the habit of running “What If” scenarios. It can be addicting to look at how much money we can save by tweaking the numbers in our personal finances. What if I move $2500 to this credit card account over here? What if I send an additional $125 each month in on my mortgage. What if I send that same $125 in on my car payment? You get the picture. This kind of thinking will drive some people to visions of Tequila and others chase the possibilities with all the fascination of a new video game.

What you will find running “What If” scenarios is that there are ways to shave years off your mortgage and save thousand of dollars without having to create a budjet that leaves you depressed for lack of fun money.

Here’s just one idea of many. Rather than opting for an Equity Acceleration Program that will cost you money, open a savings account or a checking account that pays interest. The last time I checked, Boeing Employees Credit Union was open to anyone living in Washington State and had a savings account that paid 5.5%. Now that makes all kinds of sense! Keep your nice, low interest rate, fixed rate mortgage alone. Open a high yield savings or checking account and follow the same principals as the Equity Programs. Deposit your paycheck into it and pay your bills out of it. Make some interest for yourself.

But don’t trade your fixed rate loan for an adjustable rate line of credit without understanding the risk you are taking. Very few Equity Acceleration Programs benefit the borrower as much as they benefit the Lender and the Loan Officer.

 

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Tags: bremerton-mortgage, equity acceleration programs, heloc, home equity line of credit, kingston wa mortgage, kitsap-mortgage, lender-washington, port-orchard-mortgage, poulsbo-mortgage, seabeck-mortgage, seattle real estate blog, soundbiteblog.com, washington-real-estate-blog

Yesterday was my 24th wedding anniversary, an amazing accomplishment by today’s standards. It’s really my wife’s doing, for the most part. She has been my constant, faithful support and friend through all the challenges of life. I truly don’t deserve her love, but I will continue to cherish her and never take her love for granted!

One of the things I am eternally indebted to her for is instilling within me a love for reading. Shortly after we married, we were spending the weekend at a nice B&B in the Napa Valley, and she introduced me to the C.S. Lewis’ “Space Trilogy.” I was instantly hooked and have been a fairly voracious reader ever since.

A somewhat ‘quirky’ rule I made for myself early on in the process was to never pick up a title just because it was a ‘Best Seller.’ I can’t tell you how many times while perusing the book racks at the airport that I’ve been tempted to buy the current ‘fad’ read, only to bypass it for something less popular. I know, call me strange. I simply don’t like to read something just because everyone and their brother is reading it. I enjoy discovering great writers before they become rich and famous. I did that with Michael Crichton, Greg Iles, Ridley Pearson, and Richard North Patterson.

Earlier this past week, I came across a copy of “Freakonomics” co-authored by Steven Levitt, a professor of Economics at the University of Chicago, and Stephen Dubner, an author/journalist from New York. I had seen this book previously on numerous occasions, but since it made the #2 spot on the New York Best Seller’s List, and keeping true to my ’rule,’ each time, I put it back on the shelf.

Since it’s publication in 2005, this book, like many other similar ‘trendy’ hits, has taken on a life of it’s own. You know the kind. First, there was the book, then the audio version, then the study guide. Movie rights are negotiated with Tom Hanks in the starring role. An entire line of clothing is unveiled. Corporate CFO’s flock by the hundreds to the Weekend Retreat Workshops at Vail, Palm Springs, and Miami. But I digress…back to the book.

With a few rare minutes to spare, and no one looking, I dared a quick peak.

The overview on the inside cover flap promised that, “We will reveal in shocking detail the REAL truth about Real Estate Agents!”…as though we were uncovering something akin to the Da Vinci Code or helping Nicholas Cage find the National Treasure!

Glancing through the Table of Contents, the title of Chapter 2 hit me like Bill Romanowski:

“How is the Klu Klux Klan like a group of Real Estate Agents?”

Okay, so you have duly piqued my interests. Not enough to buy the book, mind you, but certainly enough to digest Chapter 2.

After a brief history lesson on the rise and fall of the Klu Klux Klan, we discover that the demise of the Klan came when someone went undercover, penetrated their organization, and made all of their deepest, darkest secrets public knowledge. The basic premise being that the success and power of the Klan lay in its ability to hoard information, keeping their secrets and operations well hidden. Once the information was made public, all their power and control was virtually gone.

Well, it’s the same way, the authors tell us, with real estate agents. According to Levitt and Dubner, real estate agents don’t consider their clients as ‘allies,’ diligently representing their best interests and working together to achieve their client’s goals. They say, that to us, our clients are simply ‘marks,’ or ‘fools‘ who are easily duped and preyed upon. They claim that we abuse our carefully guarded information for our own advantage, converting it into an instrument of fear. They tell us that our incentives for what we do are misplaced, selfish, and motivated by greed. They suggest that our primary role is to bend the truth or tell outright lies to our clients. In their estimation, our only interest is to quickly ’crank’ out transaction after transaction, to close as many deals as possible, and with little or no regard whatsoever for our clients welfare.

In their defense, they do cite a couple of actual ‘real-life’ examples of ‘bad apple’ agents. Fancy that. Out of the 2.6 million licensed agents in the US as of June 2006, they found a couple of bad ones.

In the closing remarks of the chapter, real estate agents are mentioned in the same breath as David Duke, past Louisiana State Representative and former Grand Imperial Wizard of the KKK. The only difference being that Duke was sent to jail, and the rest of us real estate agents are still roaming free!

So why exactly is this ‘ground-breaking?’ Or ‘dazzling?’ ‘Bracing fun,’ perhaps. A ‘fearless disegard for whom they might be upsetting,’ most definitely. And quite obviously, one of the primary intentions of the book.

Well, in the past, I would have become incensed at such irresponsible writing. My knee-jerk response would be to toss the book in the nearest circular file, and move on to something less ‘caustic’ or ‘sensationalistic.’

But if there’s one thing I’ve learned here in the blogosphere, it is the tremendous value we can derive from the free and open exchange of thoughts, opinions, and ideas. There is are lessons to be learned from every perspective and viewpoint. Differing opinions are not the enemy. They cause us to re-evaluate, and either, affirm our convictions, or re-shape new ones.

And what we read is no different.

So I guess it’s time to make an exception to one of my longstanding rules. I’ll finish the book. Not because it’s ‘popular,’ but because I just might gain some new insight or perspective. 

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