William J Archambault Jr

There is no such thing as a mortgage being to low if you're paying it. If you're buying and some one else is paying the discount points! Low cost mortgages stimulate home purchasers and mortgage refinancing.

So how can any one be a victim of a low cost mortgage? Because of the law of unintended consequences! Short sighted thinkers in power, willing to sell their vote, to buy the gullible. In Get It Now! I wrote about foreign investors losing faith in us, but not all our available cash comes from foreign sources! Much of it comes from our own people. Low interest rates promote sales to working people, but they limit resources of our seniors.

When I started in banking rates both paid and charged were controlled by the Fed. Banks charged 6.5% on mortgages and paid 4.25% on savings, a crossed the street at the savings and loan they charged 6.25% and paid 4.5%, but had much stricter down payment requirements and often no money to lend. The bank always had to make 1.5% to 2.0% above cost of funds. Today it looks more like 2.5% to 3.0%.

The dirty little secret, the unintended consequences of low interest rates is that depositors absorb the loss not the bank!

So what you say? I owe more, lots more that I've got in savings! Well what about your parents? Your Grand Parents? Your own retirement?

I first wrote about this nearly 20 years ago in "The Western Wire" our weekly 2 page faxed news letter for REALTORS®, Builders, and Investors. At that time a large part of Las Vegas home sales were to retirees and partially retired people. When the rates drooped cash flow from a person's life savings dried up. Today the numbers are bigger it's not uncommon to see people retiring with a million dollars in their retirement accounts. Then we were seeing savings that had been paying 6 to 7% being cut to 4 to 5% and peoples retirement plans dashed on the financial rocks! Today those same accounts average closer to 2% with mortgages in the 5.5% to 6%+ range. That couple that worked so hard, saving for retirement are going to be lucky collecting more than 2% on their million dollars, that's only $20,000.00 a year! Add Social (in) Security and they may have $3,000.00 a month to live on!

In deed while no one planed it, though many fore told it, savers are the unintended victims of low interest rates! Their children who'll have to help them are victims! Those of us in the real estate business that will be unable to retirees will be victims!

Those politicians who would buy your votes with promises of a low cost controlled market are fooling you! This is a stick and carrot scam! When everyone has got their carrot the stick will be free to beat them.

A fair rate would be one that would allow families to buy homes and retirees to make a decent return on their hard earned savings.

My own suggestion although it's not necessary to the discussion is mortgage rates between 7% and 9% with savings paying between 5% and 7%! Of course that's what Reagan got us (down from Carter's legacy of 21.5%) and the longest peace time prosperity in our history.

One man's opinion.

Bill

William J Archambault Jr

The real Estate Investment Institute

I keep telling you that we find what we seek. It's never more true than when dealing with people! Those of us that look for good people find them. Those excepting the worst are seldom disappointed. Seeking good people becomes a lifestyle so much so that even when we're not really looking we find great examples.

Most of us on Active Rain virtually live with our computers, mine are almost as much a part of me as the glasses I've worn since first grade. If I'm out of reach of my desk top PC then normally my laptop is close at hand. It's been a hard year for my beloved PC's, the move took it's toll! First my desktop crashed for no apparent reason, but I managed to restore it with out losing data just a couple of programs. Then my laptop hard drive died losing everything. I installed a new hard drive and my restore disk followed by hours of loading programs it lives again.

Just one problem. Despite being raised together these two refused to talk to each other! Like stubborn kids they just wouldn't communicate with each other.Throwing in the towel, I responded to an add I'd seen. True to form I found not only great help but a great person! Micheal Byrd did a great job fixing my machines and even better proving my point! He's a truly nice person.

Micheal's web site: http://www.papazow.com/Support/index.html tells all about his services.

If you're as dependent on and protective of your computers as I am I highly recommend you check his services out and save the address before you need them. So many of our problems can be fixed remotely it doesn't matter where you're at Micheal can help. Personally, I've printed out his contact information and put it in my computer bag incase I can't log in.

I've invited Micheal to join our group, Realtor, Lender, Stager, Appraiser, and a Sage or two we're all dependent on our computers. Micheal a/k/a Reverend Byrd, he has a congregation of over 500 that he also takes care of will be a great asset to our group.

Please welcome Michael to our network. He's both professional and friendly.

Bill

William J archambault Jr

A knowledgeable young friend remarked that he though rates were going to go lower then stabilize for the long term. I have just two questions: "How?" and," Where is the money to come from?"

I'm going to ignore the political history of Democratic Presidents, that goes back to the nineteenth century. Certainly reality, history, precedent and logic can't compete with blind optimism.

I'd like to ask how? How can rates go much lower? If the banks are failing with the relatively higher rates we've experienced how can they survive with lower and lower rates?

The only way I can see rates getting much lower is if the source changes! It has been proposed that Big Brother take over the mortgage business and loan home owners money at 4.00% which would mean that for profit institutions couldn't compete. Assuming that the Government doesn't buy or take over all the banks first.

What ever reason if rates fall where will the money come from?

 Are we blind to China and India?

Both promising their people bigger and brighter futures and prosperity while our leaders are telling us we have to lower our expectations! All faith is based on optimism, if we're to pessimistically lower our expectations at a time when other large markets are optimismicly raising theirs where are the world's investors going to put their money? Who are the world's rich investors going to have faith in?

If you need mortgage money or if you make your living selling mortgages, real estate, or as a real estate investor get it now!

Bill

William J Archambault Jr

The Real estate Investment Institute

If you think we've got troubles today you should have been in the Midwest in 1973! We didn't have any money! Or, in California where they had so much money that they'd loan any amount on any thing and the only qualification was the ability to fog a mirror, more on that another time.

I was a young REALTOR® in Kalamazoo selling investment properties and homes when we went from money being hard to getin 1973 to impossible by 1974. My investor clients needed tax shelters. This was pre- Reagan and marginal tax rates went to 90%! That means that for each extra dollar you made the IRS took 90¢! It was a lot easer to shelter dollars you already made than to make $10.00 to take home $1.00. The best tax shelter were rental housing with new apartments providing the most shelter.

There was just one little problem. No one had any money to loan to build new apartments in the Midwest! The bankers, my peers, and everyone kept telling me "it can't be done! It can't be done! It can't be done! It can't be done! It can't be done! It can't be done! It can't be done! It can't be done! It can't be done!"

Not possessing the common sense of the average person, I just knew there is always more than one way! A year before in 1973 I'd been hired to do demographic studies for two "Rural Rental Housing" projects. Those projects were to small to make senses for my investors, but there was money available for them from the FmHA, Farmer's Home Administration! The two 24 unit projects I'd worked on were just to small. I determined that 36 units just worked and that 48 units were ideal.

I met with the state office of the FmHA. I told them what I wanted to do. It seems that the program would allow up to 50 units in a single phase, but no one had yet built more than 24. It can't be done they said, because at 25 units lots of additional regulations and laws, both State and Federal, had to be complied with, it can't be done!

Can you say? Subdividing, EPA, environmental impact reports, the then new ADA, zoning, FHA compliance (As in HUD, they provided architectural approvals.), cost restrictions (We built to FHA/HUD standards, but only had half the money!), FmHA inspections, FHA/HUD inspections, local building inspections, and God forbid DAVIS BACON! They said it can't be done!

My Grand Fathers and my Father would never let me accept "it can't be done!" Worse Brenda didn't believe there was any thing I couldn't do. There is always more than one way! Always!

I had a client with tax problems, 90 days after I convinced him we could do what no one had yet done in Michigan we had approval for 36 units in Bronson, 150 days after we started we broke ground! Never tell me it can't be done, tell me what I have to do to do it! A year later I developed the first 48 unit project in Hastings, and on, an on, until 1984.

That was then . Now! There are two programs that fascinate me. Strangely they're both FHA/HUD!

FHA 203k allows you to repair remodel and rejuvenate owner occupied housing. Before Ike, the hurricane I saw a listing on Galveston Island that would make a great B & B, while FHA doesn't finance business there are no restrictions on an owner occupied 6 bed room 7 bath home if you can afford it, what a great opportunity for a small family.

We also looked at some very large, very old, very neglected fixer uppers, in what my hostess called the YUPPIE belt. Old homes being taken back to and beyond their original value. 203k would let young families build/rebuild dream homes. This loan is not easy you're going to have to do as much possibly more than you would to build from scratch, but think of the possibilities! There is always more than one way! If I had an ambitious client or couple today we'd talk about 203k.

The other loan is the reverse mortgage. I'm still learning about this tool, but it appears that since the first of this year a senior at least 62 only needs to have or find a suitable home and put at least 40% down. Provided they can fog the mirror. Now I've never before advocated 40% down on anything, but many senior buyers are planing to pay all cash to avoid having to make monthly payments out of their retirement. The reverse mortgage eliminates the mortgage payment and either leverages or conserves their cash reserves. An incredible tool for seniors! People that were going to settle for an $80,000.00 home could now have a $200,000.00 home and in today's market that was at least a $300,000.00 house just a year or two ago, people that want the smaller home could hold on to an extra $64,000.00 of liquid security.

Impossible? It can't be done! It's true for those that tell you so, they can't do it! But, to the true believer there is always more than one way! Never ask, can it be done? If you must ask, ask what do I need to do?

You can do things like they've always been done or you can create your own realty! You can help a young family needing a part time stay at home business. You can help the urban professionals to their dream home years before they thought it possible. You can leverage seniors into more comfort and security than ever before. You can be in the real estate business selling houses or you can be in the people business building lives. The choice is yours, there is always more than one way!

Bill

William J Archambault Jr

The Real Estate Investment Institute

I think it was 1976 when after a class one of the new REALTORS® came up to me and gave me his card, rubber stamped on the back was this short ditty.

"No matter weather