Out of curiosity, and in case I need to get a home equity loan (you can tell I am paranoid right now about something else breaking in the house!), I wanted to see what my home’s current value might be. I went to zillow.com and checked out what their estimates were. This last year my home’s value went down 9.4%! Fortunately, since we bought the house in 2004, the house has increased in value by 23%. So we are fortunate that we are not underwater; in fact our house has appreciated over that time span.

Our current mortgage is for only about 67% of the current value of our home, so if we had to (which I am hoping we do not), we probably could get a home equity loan.

I don’t check often, but I do like to go to zillow just to see the trends of our area and what’s happening with housing. It’s not a bad tool to use as you are making financial decisions.

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I scored a B+ according to their test! Over at CNN Money they have a “How Healthy are Your Finances?” quiz that you can take. It focuses on 7 financial areas – this is how I scored in each area:

• House Payments – Good
• Debt Load – Good
• Stock Diversification – Good
• Life Insurance – Good
• Company Stock – Good
• Retirement Saving – Low
• Emergency Savings – Low

It’s a pretty simple test – you either get a good or a low. Each one has a little explanation for how you scored. For instance on retirement saving, they thought I needed more based on my age and income. For emergency savings, if you don’t have 3 months worth of income saved you get marked low.

I disagree with the emergency savings – it’s not how much you save that matters but what your expenses are, plus there are other factors that come into play for me:

• I’ve been laid off before so I have some experience of what my needs would truly be. It’s definetely not 3 months worth.
• I know how to work hard at getting a job, plus I have skill sets that are useful for temporary agencies, etc.
• My wife is not working now, but she could in an emergency.

But a B+ is not bad. Anyway, it’s not a bad tool if you just want a quick review. Just know that there are many factors that go into financial decisions and just because you have a different mindset, it doesn’t mean you are wrong!

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When I refinanced our home mortgage last month, the company insisted that they do a one time escrow for my local real estate tax that will be due in April. They set aside $800. I received my real estate tax bill 2 weeks ago for $618.  So I emailed the mortgage company to find out if they wanted me to send a copy of the bill. The reply came back – wrong “division”, they do not handle that, call this number. So I called that number – they said fax info to their tax department. I did that – heard nothing. After a week I called back – I got a really helpful individual this time. At first, she couldn’t find any escrow account! Then she found it and it was $0. Finally, after about 20 minutes on the phone, she discovered that the mortgage company had sent the escrow to an outside servicing company to pay the tax bill.

So after getting the number of the servicing company I called. And I called. And I called. Finally I got someone – they had already sent the payment in – all $800. So I then called our local real estate tax collector. Yes he had received the $800 check; but because it was for $800 and not the $618 owed, he had to send it back (they are only allowed to accept checks for the exact amount he said).

So then I had to call the servicing company again. And again. When I finally got a hold of the correct individual, I went through the whole story. She said they would send the correct tax amount right out, and that I would get the remainder by check in the mail, and that I should have it by Monday (Feb. 23). It is now Wednesday – no check. So tomorrow or Friday I will again hunt down the missing money.

I did not want an escrow account, even a one-time escrow for this very reason. Ugh! Now if it were me having their money, I would be getting “courtesy” calls and emails on a daily basis, plus I would be paying interest.  Customer service is such an oxymoron. It’s amazing how attentive everyone was until I signed the deal – then it’s good luck getting help!

Oh well. At least it gives me something to blog about!

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Yes, I did it. Several weeks ago I pulled the trigger and refinanced our home mortgage. Our previous mortgage was only 5 years old (fixed, 30 yr), but with a discount for refinancing with the same lender, and with interest rates at that time at historic lows, I went for it. At the same time, I rolled over my Home Equity loan (which was at 6.8%), so now I only have one loan. I ended up with a 4.75% fixed rate for 30 years. By doing so, my cash flow increased by almost $300 a month. I am putting an extra $110 a month toward the mortgage (should decrease the loan length by about 7 years and save me $33,000 in interest), putting another $125 a month toward my emergency fund, and the rest is helping to ease some budgets that weren’t quite working out.

One big diference between now and five years ago is how much they are checking everything. Last time, I don’t think they checked anything! This time, everything got checked, which is the way it should be. Some good news for me is that my appriasal came in very strong – our house is still worth a lot more than what we paid for it five years ago, so I am thankful for that.

What stories do you have out there about refinancing, good or bad?

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I like to track my net worth to see how I am doing overall toward our financial goals. I include our house as an asset, so I have been curious to see how all the news about housing and the sub prime market has affected my home’s worth and therefore my net worth. I track housing prices in my area by going to www.zillow.com. It is a great site with lots of information. The site will tell you a zestimate (their play on estimate) of what your home is worth based on what it sold for last time it was up for sale, and also by what other houses are selling for in your neighborhood. It’s a pretty cool tool to use – you can even see an arial shot of your neighborhood.

Right now for the year, my home’s estimated worth is down by 5 percent, not surprising with all that is going on in real estate. The good news is that the overall estimated selling price is up over 35% since I bought the home in 2004. I am pretty conservative in how I value my home for net worth purposes, so even though I am up over 35% for three years, or down 5% for one year, what I have the home valued at is below both by about $25,000. I will probably ride the current real estate storm out for the next few years before deciding on adjusting my home valuation for net worth purposes.

I know some people don’t include their houses in their net worth, but for me since it is currently my largest investment, and my largest debt, I believe it is important to use in calculating what is happening to me financially. Would love to hear what others do regarding their net worth.

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As I mentioned briefly the other day, I’m buying my first house. Yes, me, the guy who is always talking badly about the housing market, and buying a house in general. I finally decided that I was ready for a home of my own for my family, and the timing seemed to be good.

What prompted my change of heart? Well, that depends. I don’t think I really had a change of heart, just perspective. Here’s a few reasons I think that purchasing a home is a good decision for me now:

• The market in southern Texas seems to be pretty strong. We didn’t get the out of control rise in pricing like folks on the East and West coasts. Housing prices have risen, of course, but not anywhere near as much as the coastal areas.
• The rate offered seems to be pretty impressive – 5.55% fixed for 30 years, with no points of any kind.
• I am not stretching my budget using an unconventional or exotic loan so that I can “afford” a home.
• I did not pick the largest, fanciest home, or the highest class subdivision. In other words, I chose practically.
• Ryland Homes, the builder I chose, focuses pretty heavily on energy efficiency. I don’t expect a $300-$400 per month electric bill like I might elsewhere.
• I am perfectly happy to live here for 5+ years if the market should fluctuate in a negative manner.

Overall, I think I am making a smart decision. My monthly output will increase by several hundred dollars per month, but I’m also moving from a ~1100 square foot apartment to a 2732 square foot home – situated on a 6600 square foot lot. No, it’s not huge, but it’s plenty big enough for my son to play in, and for a dog if we get one.

The closing date is tentatively set for Friday Sept. 28 – just two days away. Apparently the lender is waiting for a form from the VA – but that’s the only potential holdup. I have my fingers crossed that everything goes smoothly, and we can start moving in this weekend. I can’t wait.

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Not official yet.. but it looks like I’ll be buying a new house here in the next few months.  Details to follow.  Quite an exciting event, I must say.  Mountains of paperwork though.  Details to come, don’t worry.

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Call me a doomsayer if you like, but it’s all coming down now.  Not in a big crash as some had expected, but it certainly is deflating.  Washington Mutual announced their numbers yesterday and their profit is down 20%.  Why?  Deflating Real Estate loans.

a loss in its home loans unit, driven mainly by subprime lending weakness, caused a 20 percent slide in first-quarter profit.

They go on to say that the loss is actually less than they thought it would be so it wasn’t as bad as it looks.  Sounds like a little bit of sugarcoating to me.  A loss is a loss.  Take for instance the fact that they had a $113 million loss this quarter and it was a $52 million gain at the same time last year.

At best, if you graph it out, it looks like a bubble.  At worst, it’s a straight line down.  No ifs, ands, or buts here.  POP!

[tags]money,loans,subprime loans,wamu,real estate,real estate bubble[/tags]

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