Short Housing

[chisel]

Originally posted by rs7

PS: the name of this thread is "short housing"...has anyone come up with a real way to do it? Or to hedge against a downturn as a homeowner?

What about shorting FNM or IYR?

I know these are already off their highs, but maybe short on a good bounce?

I think the true "shorting" method is to rent. The way I think of it is that each month's rent is like paying the dividend on a short stock.

RS7, thanks for bringing up the question again. I'm all ears for other shorting ideas.

 

[vulture]

Originally posted by chisel


What about shorting FNM or IYR?

I know these are already off their highs, but maybe short on a good bounce?

I think the true "shorting" method is to rent. The way I think of it is that each month's rent is like paying the dividend on a short stock.

RS7, thanks for bringing up the question again. I'm all ears for other shorting ideas.

I agree...At this point in the game, if you do not already own, its like wanting to get long in January of 2000...You might get some more upside, but your downside risk far outweighs it...If you find the right location, as many people have mentioned, there are some serious deals in the renter's market...You don't have to tie up a big chunk of money in a down payment and you dont have to go through a financial interrogation with a mortgage company...

 

[big_jdez]

Originally posted by Bryan Roberts


if 20% of the mortgagers defaulted on their loans then Fannie Mae would puke!!!! it would make enron look like kindergarten recess.

Most loans that are over 80% LTV require PMI or mortgage insurance. GE Capital Services as well as a couple of others control most of that game. GE is (was?) the largest cap company as well as huge conglomerate and this part of the company brings in the majority of profits.

Something to chew on.

 

[chisel]

Originally posted by big_jdez


Most loans that are over 80% LTV require PMI or mortgage insurance.

I'd like to know how much the mortgage insurance companies have in reserve in relation to the amount of mortgages they're guaranteeing.

Do they have their reserves in the stock market or junk bonds? Something to think about...

 

[big_jdez]

Originally posted by chasinfla
"100% Financing Available" -- Wells Fargo Home Mortgage.

When they get to 110%, we might be near the top...

Actually, now, all this reaching and stretching to get everyone bought is a sign of the weakness of the market, not it's strength.

FHA loans for 97% LTV have been around for years, as well as 125% second loan for home improvements.

If Wells Fargo has a 100% loan, rest assured there is some sort of gimmick and you will have to jump through hoops. Off the bat I can guarantee you that their appraisers will bring back very low appraissals plus they'll require the customary 20% PMI.

So believe it or not they won't lose. They'll just package those loans and sell em on the Street. What a business.

When I worked in Real Estate and saw that the mortgage consultant was driving a new Mercedes, I knew I was in the wrong business.
So I went to "do" mortgages, let me tell you , some mortgage companies make more on the loans than both real estate brokers combined.

America, what a country.

 

[chisel]

Originally posted by vulture
you dont have to go through a financial interrogation with a mortgage company...

That's another big reason I'm renting. I'd like to pay cash for my future house and bypass all the paperwork, interest, and nosy questions.

 

[big_jdez]

Originally posted by chisel


I'd like to know how much the mortgage insurance companies have in reserve in relation to the amount of mortgages they're guaranteeing.

Do they have their reserves in the stock market or junk bonds? Something to think about...

Anybody have GE's reports handy. I'm sure their new open book accounting will list this.

If you think you (me) look impressive with your multi monitor setup and all those pretty numbers up on the screen so that everything can be in place to make a profit on our transaction you can believe that they're decades advanced in the statistical reports they run to ensure profitability.

 

[Dustin]

Originally posted by chisel


That's another big reason I'm renting. I'd like to pay cash for my future house and bypass all the paperwork, interest, and nosy questions.

It's worth spending a few hours with a mortgage broker to get the tax deduction...do the math.

 

[Aaron]

Originally posted by Dustin


It's worth spending a few hours with a mortgage broker to get the tax deduction...do the math.

It sounds like you've already done the math, Dustin. How do you figure a mortgage is better than paying cash?

Here's the way I figure it... 15 year fixed mortgage, no points is currently quoted at about 5.5%. Vanguard's Long Term Tax Exempt Fund is currently yielding 4.15%. You'd be unwise to borrow at 5.5% to earn 4.15% -- better to pay off your mortgage, or not take one out to begin with.

Sure, you might be able to get an (after tax) return better than 5.5%, but you'll have to take on some risk to get it, and then you risk doing <i>worse</i> than 5.5% also.

 

[Dustin]

Originally posted by Aaron

Sure, you might be able to get an (after tax) return better than 5.5%, but you'll have to take on some risk to get it, and then you risk doing <i>worse</i> than 5.5% also.

I am making the assumption that <b>you</b> know what you are doing, and can make more than 5.5% on your dollar.