Maryland Real Estate Consultant

 I was recently asked what the heck is a HUD 1- Here is a quick definition

HUD-1 Settlement Statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include loan fees, points, and initial escrow amounts, and other fees. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

It took awhile to complete but I recently put together a home buyers book. If you ever need info on purchasing a home, do not hesitate to call me @ 240-472-9008. I can forward you a copy upon request.

Until next time take care.

The Federal Reserve significantly cut rates today for the sixth straight time since September. This follows a busy weekend where the Fed also extended its hand to Wall Street, bailing out Bear Stearns with JP Morgan Chase. While rate cuts look good at face value, you need to prepare for what's to come.

Why did they do this?
The Fed wants you to start spending money and wants to boost consumer and Wall Street confidence. Consumers are under stress with increasing consumer prices and a slowing housing market. Wall Street banks have been under stress from mortgage defaults and their impact on corporate balance sheets.

How does this impact you?
Fed rate cuts are inflationary. Since the Fed started cutting rates in September of last year, oil prices are up nearly 40%, gold prices are up over 25%. This is the direct result of a falling dollar which occurs from Fed rate cuts.

As a result, mortgage rates will ultimately rise from here. It is inevitable. Inflation is the arch enemy of fixed-income investments, long-term bonds and mortgage-backed securities, upon which mortgage rates are based.

Here's a look at the inflation picture: Gas prices last September, prior to the Fed's current cutting trend, were roughly $2.75 a gallon. Today, gasoline averages $3.25 a gallon nationally, up 18% before the first rate cut. This is a sign of inflation.

A Way to Avoid Foreclosure

Why would a lending institution accept less than what it is owed from a homeowner. Don't they lose money that way? Well, yes and no.

The short sale is most often used as a way to avoid foreclosure on a home. As the name "short sale" implies, it's a way to sell the home quickly when the homeowner is in financial trouble and facing foreclosure. Thus, the short sale is one of several ways a homeowner can avoid foreclosure on the home.

Mortgage lenders will also want to avoid foreclosure, as much as possible. Lenders are in the business of loaning people money -- they are not in the business of managing properties, marketing them, selling them at auction, etc. These cost the mortgage lender money they don't want to spend. And that's why they often agree to accept a bit less than what is owed to them, as long as the homeowner can sell the home quickly by way of a short sale.

By listing the home below its market value, it's a safe bet that the home will sell quickly. Many homewoners have a choice, never hesitate to ask questions.