Alt-A Mortgages: How They Work


A house is probably the single largest investment you will ever make, and if you’re like most, you’ll need a mortgage to finance it. Mortgages are loans that are secured by specified real estate – namely, the house that the loan is being used to purchase. Depending on factors like your credit score, employment history and the loan-to-value (LTV) ratio, you may be offered a prime mortgage, subprime mortgage or something in between: an Alt-A mortgage. Here, we take a quick look at the Alt-A mortgage, and why Wall Street wants to bring them back.
Alt-A Basics

Most mortgages are either prime or subprime. Prime mortgages are offered to borrowers who have higher credit scores (and, therefore, lower risk), and come with lower interest rates. Subprime mortgages go to borrowers with lower credit scores and – to make up for the added risk – lenders charge higher interest rates on them. Alt-A mortgages are loans that fall somewhere in between the prime and subprime category in terms of risk and interest rates. (For more, see How Interest Rates Work on a Mortgage.)

One of the

Mortgages Why It May Be Easier to Get One Now


Good news came out of Washington recently. Fannie Mae and Freddie Mac, the government-chartered agencies that purchase mortgages from private lenders, agreed to rules that would potentially open mortgage markets to borrowers with less than perfect credit. (For more, see What You Need to Know About Fannie Mae Mortgages.)

The Problem

To understand why this news is so important, you first have to understand the problem. Fannie and Freddie, as they are known, don’t lend money. A consumer would never call them to get a good-faith estimate on an upcoming home purchase. Instead, Fannie and Freddie are publicly traded companies created by Congress that help provide stability and liquidity to the mortgage market.

When a lender makes a loan to finance a housing purchase, often that lender’s ultimate goal is to sell it to Fannie or Freddie in what is called the secondary market. By selling the loan, the lender clears it from his or her books, freeing up money and making an immediate profit on the loan. Fannie and Freddie are charged by Congress to help low-, moderate- and middle-income families achieve their dream of

Investing in Manhattan Real Estate with Just $20,000


You booked an apartment in Barcelona on Airbnb for your last vacation. You prefer Uber to taxis. You just chipped in $50 to a friend’s Kickstarter music project – and you’re looking forward to getting a copy of the CD when it’s released. You may not call yourself a crowdfunding fanatic, but you’ve fully embraced the spirit of the sharing economy.

So why not take the next step and make crowdfunding work for your finances? Until now, investing in New York City real estate was probably something best left to those blessed with an inheritance or at least some seriously great stock options. Now that crowdfunding – scratch that, call this venture crowd investing – has entered the real estate scene, some of America’s most coveted properties just became a little more accessible to the masses.

But just how accessible? (For related reading on the Big Apple’s real estate scene, see: New York City Real Estate: A Safe Haven?)

An Ambitious Goal

Prodigy Network calls itself “the leader in real estate crowdfunding,” and it certainly is the vanguard. The company’s philosophy, according to its website, seems practically altruistic:

Top 5 home improvement resolutions for the new year

The party season is over and we’re now a month into the New Year, making it the perfect time to tackle those jobs around the house that you’ve been putting off.

Freshen up your abode with these top 5 home improvement resolutions:

1 Cut your energy costs

The world’s resources are finite, and costs are sky-high. So begin your New Year by finding cleaner, cheaper ways to power your home.

Insulation, energy-efficient windows, better heating and cooling systems, solar power, and water-saving features can significantly reduce your energy consumption and costs.

2 Grow your own

If you’ve got the space, try growing your own produce – you’ll save money, improve air quality, and reduce the amount you spend at the supermarket. Best of all, you can be sure you’re eating organically and doing your part for the environment.

Grow herbs on the windowsill, make a veggie garden in the yard, or team up with neighbours to set up and help run a community co-op.

3 Have less stuff

It’s said we’re happier when our living space is clear, clean, and uncluttered. Make it one of your top resolutions to minimise what you own – so you can truly treasure your special stuff and make the most of essential items.

A year in review what were the biggest home living trends of 2015

Interior designers like to look forward, projecting the hottest trends for the year head. But sometimes it’s good to reflect. So with that in mind, we look back at 2015 to see which interior design trends made waves.

Metallic magic

They picked it, and it was spot on – metallic was massive in 2015. From copper lights and sinks to brass taps, this trend is likely to stay well into 2016. It’s easy to understand why. Metallics set a romantic, regal, rustic mood, adding elegance and age-old raw beauty with a contemporary edge. From bathroom tiles to dining chairs, metallic certainly set the design world on fire in 2015.

Natural nook

In recent years, designers have loved merging indoors with out, blending barriers and taking relaxed living to every space – even the outdoor room. And in 2015, the natural style was bigger and bolder. We saw a plethora of plants being brought indoors, livening living rooms and adding tranquility and calm. The darker the leaves, the better, with rich foliage complementing all décor styles, from neutrals to brights.

Patterned perfection

Geometric patterns were another top trend in 2015. We saw all sorts of weird and wonderful tiled surfaces, some with a nod to the exotic

Top 5 landscaping trends for 2016

Landscaping has been a trend in Australia as more Australians embrace the indoor-outdoor lifestyle. On the other hand, environmentally conscious Australians are avoiding lavish landscapes that require high maintenance and large amounts of water for irrigation. In general, the landscaping trend for 2016 leans towards lower maintenance, environmentally friendly gardens. These are five of the top landscaping trends for 2016.

One: Australian Native Plants

Landscaping and gardening professionals are choosing Australian native plants over many species of exotic plants. The reason is simple: we have many beautiful native plants. Natives have the additional benefit of needing less water or maintenance than species that do not naturally grow in the Australian climate.



The best places to get advice about native plants for your garden are from your local nursery or a local garden designer. The emphasis here is on “local,” because only local experts will know the best native plants for your area.

Two: Water Features

At first glance, including a water feature in your garden may seem like a waste of water. However, water features are designed to recycle water, so little water is wasted. A water feature is a refreshing addition to any garden. It can be of any size, from a small bird

Garden cleanups your checklist to get your yard into shape

We tend to do routine jobs in the garden, but often overlook less routine jobs until the garden starts to suffer from our negligence. If you’ve been neglecting your yard, you may need to roll up your sleeves and give it a good cleanup. Here’s a checklist of jobs to get your yard back into shape.

Garden Cleanup Checklist

Most of us remember to mow the lawn and water the garden, but occasionally your garden will need extra care. A good way to keep your yard in shape is to give it a good seasonal cleanup. These are some of the things you need to do before spring and autumn:

  1. Weed your garden.
  2. Follow up weeding with a layer of mulch, if needed.
  3. Prune, trim and remove dead branches and twigs.
  4. Aerate, feed and repair your lawn.
  5. Clean water features.
  6. Repot your pot plants as necessary

You can take a step-by-step approach and schedule cleanup tasks for weekends or you can hire a garden maintenance service to do the work for you, but these are the most essential garden cleanup jobs. If you do them in early spring and late summer, maintaining your garden throughout the rest of the year will be much easier.

Easy Ways to Brighten Your Garden


Real Estate in 2015

Real estate investors just completed a very successful 2015, but there are some reasons to doubt the sustainability of rising property values. Despite banner years for a lot of major metro housing markets, some are concerned about irrationality in real estate pricing and investor expectations.

Understanding Real Estate Performance

Real estate is a unique investment. It can be touched and admired and improved, unlike a stock or a bond. It also depreciates and requires maintenance, unlike gold. However, real estate performance is often summed up in terms of prices rather than cash flow – like saying a business had a great year because its share price increased even if its revenue and profits didn’t keep up.

It’s often assumed that rising home prices are good for the economy but, as 2003-2007 proved, this isn’t a very useful indicator. Houses and apartments have a market price like any other good; the markets would hardly celebrate food prices going up 10% every year. If real estate prices rise faster than wage growth, then owning and renting becomes less affordable and spending should necessarily drop elsewhere in the economy.

The principal reason why people purchase property is to have shelter, not to gain extra equity. Living in

Beach Property in California The Pros & Cons

A beachfront condominium probably offers the most affordable way to get your own piece of the fun-in-the-sun California lifestyle. Affordable is a relative term when buying a basic condo only steps away from the sand; it requires a starter budget of over $1 million. This $1 million buys you a condo with under 1,000 square feet, which might not even have two bedrooms, in a condominium complex with few amenities.

There are two main types of buyers for beach condominiums: those who want to live at the beach and enjoy the laid-back lifestyle and those who want to make money from the strong tourist trade while having a vacation home to visit a couple weeks a year. The friend or enemy of either residents or investors is the covenants, conditions and restrictions (CC&Rs) of the condominium complex.

Why CC&Rs Are Important

CC&Rs set the rules for the condominium complex. They cover everything from parking to what color your front door can be painted. The rules generally apply to common areas and public spaces but can regulate other aspects of ownership such as operating a home business or whether the condo can be rented out. Residents and investors are often on opposite sides of

The 5 Best Real Estate Lawyers in Chicago

Whether you are a tenant or landlord, first-time homebuyer or commercial developer, access to a competent, experienced real estate lawyer is critical to protecting your rights. Real estate lawyers specialize in legal matters arising from ownership in real property, which includes land and any attached structures. They handle all manner of property transactions, represent stakeholders in property disputes and advise clients on land use laws and building codes, among many other services. Whatever issue you are facing, there are dozens of lawyers across Chicago ready to help. The following are some of the city’s best real estate lawyers in a variety of specialty practice areas, all of whom have long records of experience and competent performance in Chicago.

Lysinski & Associates

The law office of Lysinski & Associates handles a wide variety of legal issues facing residential and commercial real estate developers, investors and landlords. The firm offers expertise in real estate transactions, real estate financing and titling, commercial leases, landlord-tenant disputes, and zoning and building code issues. It handles loan modifications and short sales, eviction enforcement, lease disputes, and homeowner and condominium association disputes. Lysinski & Associates also has a comprehensive construction law practice offering representation to developers and investors through

Mortgage Rates How the Interest Rate Rise Affects Mortgages

Of all the areas of finance and money-lending, perhaps nothing hits closer to home (literally) than the prevailing mortgage interest rate. After all, your ability to buy a new residence, or to refinance the loan on your current one, depends on it. So how do these rates operate, and what affects them?

How It Works

The quick and dirty answer: They’re constantly changing, depending on what the government is doing and how Wall Street reacts.

Now, the slow and clean answer. You probably know that much of what happens in the world’s financial markets happens in real time. When some new piece of news hits, the stock exchanges and other investment markets react within milliseconds – yes, milliseconds. With the help of highly sophisticated computers, investors can move money from one place to another to profit from the information faster than you can draw breath. That means that the interest rate your mortgage lender offers you could be higher or lower based on something that happened just minutes ago.

Take, for example, the current New York Stock Exchange downturn. The year 2016 has been a depressing start for Wall Street investors. The Dow Jones Industrial Average is down more than 9% and has logged

Beach Property in Puerto Rico The Pros & Cons

The dream of living on a Caribbean island never gets old. U.S. citizens can make their dreams come true by buying beachfront homes in Puerto Rico, without any immigration paperwork or the hassles that come with buying real estate in foreign countries. To boost the local economy and lure mainland homebuyers, Puerto Rico’s lawmakers passed Act 22, a type of tax haven law that provides U.S. citizens with tax exemptions on interest, dividends and capital gains. You must live in Puerto Rico for at least 183 days per year to take advantage of the tax breaks. Real estate developers continue to build luxury condominiums on the island, especially in the San Juan area and along Puerto Rico’s northern coastline.

Puerto Rico’s economic recovery has been slow, following a prolonged recession. Unemployment continues to hover around 12% as of 2015, and thousands of Puerto Ricans continue to relocate to the mainland United States in search of jobs. Economic conditions in Puerto Rico might seem bleak, but savvy homebuyers have been seizing opportunities to buy beach condos at competitive prices in a real estate market that investors say is on the rebound.

Bilingual Real Estate Professionals

You need to understand and speak Spanish fairly well

New York City Real Estate: A Safe Haven

Remember the Great Recession of ’08? You know, the one where the housing market bubble popped and millions found themselves holding and sometimes even abandoning real estate whose value had plunged underwater, a few thousand leagues under the mortgage? Yeah, it’s not something you’d likely forget if you found yourself drowning in that whole mess. Well now seven years has passed and unemployment has dropped to 5.1% from its peak of 10.2% in October, 2009. With more jobs and steady income, could today be a good day to invest in New York City real estate? Or is it reckless to buy now and hope that there’s not a bubble later, and that the place rises in value instead of crashing?

Or might it instead be wiser to stuff spare change inside a mattress or maybe purchase commemorative coins honoring 9/11’s First Responders?

For those last two approaches, probably not. (Mattresses aren’t FDIC insured, and remember, not all commemorative issues increase in value.) There’s the old saw that real estate makes a smart investment, since they’re not making any more land. And yet there’s the line from a New York Times review of the recent film of the mortgage crisis, 99 Homes, a

The Top 5 Real Estate ETFs for 2016

The U.S. real estate sector rallied to multiyear highs in the first quarter of 2015 and turned sharply lower, losing ground into the year’s end. Economic uncertainty and rising interest rates weighed on the group, which failed to generate buying interest despite attractively high dividends. 2016 will mark a pivotal year, possibly ending the sector’s long-term uptrend.

REIT ETFs offer easy access, with a number of highly liquid instruments focused on different aspects of this broad-based industry. High yields add a measure of security to investment positions while the opposite is true for short sellers who have to pay distributions when holding through ex-dividend dates. Distributions from all REIT ETFs are taxed as ordinary income.

19 ETFs currently fill this category but just five trade more than 100,000 average shares per day and hold in excess of $1-billion in assets. While it makes sense to stick with the most liquid membership to lower costs due to wide bid/ask spreads in thinner instruments, variations in expense ratios may overcome this cost factor.

The Top 5 REIT ETFs For 2016

Name Assets Avg Vol
Vanguard REIT ETF (VNQ) $27,234,752.00 4,181,919
iShares U.S. Real Estate ETF (IYR) $4,608,684.00 9,266,248
iShares Cohen & Steers REIT ETF (ICF) $3,550,140.00 336,716

7 tips for streak free window cleaning

Window cleaning can be a task we dread doing, but it doesn’t have to be. No matter how hard you try, it seems like streaks appear and those streaks become the focal point of your windows when you should be enjoying the view outside your windows. The trick to streak-free window cleaning isn’t the amount of work you put into the job. It’s the way you do the cleaning and the tools you use.


7 Tips for Streak-Free Window Cleaning

One: Distilled Water

One reason why windows have streaks is because of the minerals in hard water. If you live in an area where your tap water is hard, it can be almost impossible to get streak-free windows if you’re relying on water and a diluted cleaning solution. Try using distilled water and you’ll probably get better results.

Two: Use a Squeegee

If you use a window washing solution and mountains of paper towels to clean your windows, you are probably wasting your time. Purchase a squeegee and you’ll have streak-free windows in far less time. The trick to using a squeegee is to not lift the squeegee as you use it. It might take you a little time to master the technique, but once

The Complete Guide to Financing an Investment Property

Real estate can be a hedge against market volatility when stocks take a tumble, and there are many perks associated with owning an investment property. Becoming a landlord is a smart way to generate a steady passive income stream, but it does take a certain amount of cash to get started. When you don’t have a huge bankroll, taking out a loan may be the only way to seal the deal. (For more, see the tutorial: Exploring Real Estate Investments.)

Investment property financing can take several forms, and there are specific criteria that borrowers need to be able to meet. Choosing the wrong kind of loan can impact the success of your investment, so it’s vital to understand how the various alternatives work before approaching a lender.
Option #1: Conventional Bank Loans

If you already own a home that’s your primary residence, you’re probably familiar with conventional financing. A conventional mortgage conforms to guidelines set by Fannie Mae or Freddie Mac and unlike an FHA, VA or USDA loan, it’s not backed by the federal government. With conventional financing, the typical expectation for a down payment is 20% of the home’s purchase price but with an investment property, the lender may require

The Basics of Reinvesting REIT Dividends

An increasing number of yield-starved investors are finding refuge in one of the last bastions of high-yield and relatively safe investments – real estate investment trusts (REITs). With dividend yields averaging twice those found in common stocks, some as high as 10% or more, you might question the safety and reliability of REITs, especially for conservative income-seeking investors. REITs should play a role in any diversified growth and income-oriented portfolio. REITs are really all about the high dividends, and they can offer some capital appreciation potential.
How Do REITs Work?

A REIT is a security, similar to a mutual fund, that makes direct investments in real estate and/or mortgages. Equity REITs invest primarily in commercial properties, such as shopping malls, hotel properties and office buildings, while mortgage REITS invest in portfolios of mortgages or mortgage-backed securities (MBSs). A hybrid REIT invests in both. REIT shares trade on the open market, so they are easy to buy and sell. The common denominator among all REITs is that they pay dividends consisting of rental income and capital gains. To qualify as securities, REITs must pay out at least 90% of their net earnings to shareholders as dividends. For that, REITs receive special tax

Mansion Prices Are Hitting New Highs

Following a four-year boom in the U.S. luxury real estate market, prices have dampened in all but a few markets amid global economic fears. “There’s volatility in China and Russia, and there’s the oil issue in the Middle East,” Dan Conn, CEO of Christie’s International Real Estate, the luxury-property brand of the renowned auction house, told Bloomberg Business. “I have no doubt there’s an impact overall on the market.”

Ritzy Enclaves the Exception

While most of the luxury markets have softened, prices have remained strong in ritzy enclaves such as Aspen, Colo.; Beverly Hills, Calif.; and the various Hamptons of New York’s Long Island. According to market trend data from real estate aggregator, the median sales price in Beverly Hills (zip code 90210), for example, was $3.07 million during the Oct. 15, 2015, to Jan. 16, 2016, period. That represents a 41.1% increase over the previous quarter and an increase of 52.5% from the prior year. The average price per square foot has increased 32.4% year over year (to $1,086) and 66% over five years ago (when it was $656).

In East Hampton the real estate market has experienced a similar trend: The median sales price – about $1.3 million –

4 Real Estate Plays for Income Seekers in 2016

From 2009 to 2015, real estate investment trusts (REITs) have greatly benefited from low interest rates, an improving U.S. economy and higher occupancies. Many REITs used the low interest rate environment to their advantage by refinancing debt obligations with low interest rates. However, interest rates begin to rise gradually with the first rate hike that took place in December 2015. As interest rates are normalizing from their exceptionally low levels, certain REITs with high debt burdens may start experiencing lower earnings as a result of higher interest expenses. Focusing on REITs that have moderate debt levels and strong tenants may prove advantageous for income-seeking investors in 2016.
Crown Castle International

Crown Castle International Corporation (NYSE: CCI) owns, operates and leases wireless infrastructure, including towers, rooftops and distributed antenna systems. The company’s operations are focused on the U.S. market. The company exposes investors to a growing wireless tower industry, which has been a strong free cash flow generator for a long time. As wireless data demand continues to surge, so does the demand for wireless infrastructure, leading to better returns for companies like Crown Castle International.

Like other tower-leasing companies, Crown Castle International leases its towers with rent contracts at about 10 years;

How to Get More Yield From Your Investments

Cash is king, particularly in periods when the stock market is on the decline. But even in times of stock market prosperity, lots of investors look for yield out of their investments. It becomes even more important the closer you get to retirement. After all, generating income and at the same time protecting what you already saved is a top goal during your golden years.

While chasing yield can be a dangerous game for investors, there are ways to boost the amount of income your investments throw off without compromising your risk tolerance or your nest egg.

From shifting your bond strategy to shorter term investments to investing in dividend paying stocks, here’s three ways to get more yield out of your investments. (For related reading, see: Finding the Best Yields.)
Dividend Paying Stocks Can Provide Yield

A sound financial plan gives investors exposure to different investments and asset classes, and should at least include stocks and bonds. It can also encompass alternative investments like real estate. Within those segments there are opportunities for investors to boost the amount of yield they generate.

Take stocks for starters. Investors looking for yield have a few ways to achieve that. One of the most popular ways