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Cheat Sheet Q & A:

Bottom Line:  Today’s topic / question comes from a gentleman who points out that if you want to buy a home it’s easier than most people think.

A gentleman who works with people to help rebuild their credit shared today’s topic idea.  He pointed out that many are able to obtain a mortgage with a credit score that’s as low as 600 (and most aren’t aware).  He’s right and the product that makes this possible is the FHA mortgage. 

There is a perception among many that if you don’t have good credit and a lot of money to put down you’re locked out of the housing market.  That perception exists in part because it is at least somewhat true when it comes to traditional bank loans.  I have two expert mortgage partners I trust for changes in the mortgage market and they both are saying the following:

Traditional bank loans most commonly require the following at a minimum:

  • Credit score of 680+
  • At least 10% down
  • At least two years removed from short sale & 3+ years from bankruptcy

FHA loans are much more flexible – they generally require the following:

  • Credit score of 620 (it actually may be possible to have a score as low as 580 but it’s rare to have success below 620):
  • 3.5% down

Clearly there are many people who may be able to purchase a home through FHA that wouldn’t be able to with a traditional bank loan.  But what else should be considered?

  • FHA loans all come with mortgage insurance attached regardless of how much is put down on the home

This means that if you do have 20% to put down on a home and a credit score that will enable you to obtain a traditional mortgage - that will almost certainly be the better option. 

The key, if you do have impaired credit, but are otherwise in rebuilding mode – is to realize that there are more options and opportunities available to participate in the housing market than most realize.  Even if you suffered a distressed property situation during the housing bust you may be able to purchase again.

If you have a question or topic you’d like me to address – email me:


To buy a new or existing home?  There is a big value difference:

Bottom Line:  Staying with the housing theme for a moment.  If you are considering a home purchase, what’s the better value – new or existing?:

Typically in a housing market, as prices move higher or lower, you will generally see similar changes in pricing with new and existing homes.  That’s not currently the case. 

For years home builders have been sitting on the sidelines just trying to stay in business while riding out the darkest days of the housing market since the Great Depression.  Now that we’re in the 14th consecutive month of a national housing recovery, we’re seeing the home builders push prices as much as they can as they try to make up for lost years.  This has created a great value divergence between existing home prices and new home prices:

  • Avg. existing home price $231,400
  • Avg. new home price $304,000

While we’ve seen the avg. price of a home increase by about 6% over the past year nationally, it’s actually been a 17% increase for new homes. 

That’s not to say that buying a new home isn’t right for you or that you can’t find relative good values with new homes, however if you buy a new home over an existing home, you’re likely to pay a much higher price on a relative basis for that property.


What actually happens to spending & the economy if sequestration happens?:

Bottom Line:  The very word “sequestration” invites immediate tune out and I get that.  So let me break down what actually would occur starting March 1st if that word happens:

  • $6 billion net fewer dollars will be spent per month by the Federal Government
  • 2.8 million people employed would be affected and possibly furloughed
  • The growth rate of the economy would likely be about .7% lower this year
  • The unemployment rate would likely rise slightly overall

In the grand scheme of things $6 billion in monthly savings by the Federal Government isn’t much more than a couple of drops in the bucket.  The Federal Government spends more than $10 billion per day, so we’re really talking about saving 12 hours of money each month.  Not exactly a dramatic spending change from the feds.  The other numbers do catch your attention though.

2.8 million people affected certainly is a big deal to them.  Most are in defense related occupations.  The economy growing at nearly 1% slower pacing is a bigger deal when we’re already in a super slow economy as it is but…

It’s important not to lose sight of principals and the purpose of the Federal Government.  It’s not the job of the Federal Government to create jobs.  It’s also not the role of the Federal Government to create economic growth.  Both of those are supposed to be driven by the private sector.  Moreover we know that the current spending levels aren’t sustainable so there will be dramatic changes – sooner or later (and if it’s later – it will be much more painful).


Porn on Twitter…  the latest on Vine and what to know to protect your kids:

Bottom Line:  The Vine app hit the scene a couple of weeks ago and it’s been a hit for the most part so far.  The Vine enables video embedding directly into Twitter stream feeds which is a big plus for those wanting to share videos through tweets.  Unfortunately some bad apples immediately started to take advantage of the service and embed porn.  Here’s the update.

The Vine has been placed on age restriction for use.  When downloading the Vine it now will make you verify that you’re over the age of 17 and this is an opportunity for parents to try to protect kids by restricting access by using parental controls on mobile devices.


Don’t worry it’s only the money supply…  Latest hack attack:

Bottom Line:  If you listen to the Feds or the typical media report of this it probability sounded like little more than background noise.  Another day, another hack attack, Feds say everything is fine…  yada yada…

Not so fast.  Anonymous successfully hacked into the Federal Reserve.  What does the Federal Reserve do?  Control the money supply of the United States of course!  Moreover – does the Fed really print money these days or is money of the money supply controlled electronically?  Electronically of course…  So we’re supposed to believe that this isn’t potentially a big deal? 

Secondly – 4000 of the most influential bankers in the world had their personal information stolen.  Not only is that a personal concern for all of them but couldn’t also be a bigger concern?  With personal info regarding these bankers could hackers or other terrorists use that information to try to intimidate and compromise them?  This is potentially a much bigger incident than anyone is really suggesting.


The length of time out of work for those who lose their job is improving:

Bottom Line:  Here’s a quick hitter for you that’s maybe the best news we’ve had on the labor front in awhile. 

The percentage of people unemployment that are considered “long term unemployed” is dropping.  Year over year those who have been unemployed for longer than six months has actually declined from 43% of the unemployment pool last year to 38% currently.  The less pleasant news is that the new employment averages 67% of the compensation of the previous job but it’s better than unemployment.