Mortgages Made Simple with Rick Gundzik

Sunday, April 17, 2005
Alan Greenspan - Uncle Al
Today we would like to discuss the role of Alan Greenspan in our economy, or as we like to call him, "Uncle Al." Most of you have heard of Alan Greenspan from your local newscast or at a dinner party with friends, but never received an explanation of what he really does.

The news media has stubbornly and erroneously opened your local late night news with a comment such as "Be prepared to pay more on your credit cards, Alan Greenspan has raised interest rates." Alan Greenspan does NOT control mortgage and/or credit card interest rates.

Uncle Al's job is to control monetary policy. Essentially, this means he tries to keep the economy growing at 2-3% per year, keep inflation at a reasonable level and keep the economy out of recession. This is not an easy job with an economy as large as ours.

There are several ways he tries to "control" the economy; He raises or lowers short-term interest rates that your local bank pays. He adds or subtracts money from the money supply or he simply makes an interesting comment.

If he feels the economy is growing too fast, he can 1. Raise the short term rates, 2. remove money from the economy by selling t-bonds and 3. Say he's going to raise interest rates. A fast economy is dangerous as it can cause rapid inflation, which makes everything you buy more expensive.

If he feel the economy is slowly down too quickly, he can 1. lower short term rates, 2. add money to the economy by buying bonds and 3. Say he plans to lower rates. A slowing economy is bad as it will lead to people losing their jobs.

The concept can be simplified. If you want to increase growth, people must spend more money. So make it easier for them to get it. If you want to slow growth, make it harder for people to spend money.

Uncle Al's job is often confused by the media. If you have any questions, feel free to contact us.
posted by Pac Res @ 4:53 PM   0 comments
Sunday, April 3, 2005
Garbage Fees - Part 2
Garbage fees are unnecessary fees charged by companies in a loan transaction. While Garbage fees typically are attributed to mortgage companies; Escrow, Title and Real Estate companies sometimes charge them too.

Escrow companies charge Loan-tie-in fees, audit fees, email document fees or document preparation fees. These fees are in addition to their escrow/settlement fee and are essentially garbage fees. I personally think printing a set of loan documents isn't labor intensive enough to warrant a fee.

Title companies are heavily regulated so you will seldom see anything out of the ordinary. They typically will charge a Title policy, endorsement, sub-escrow fee and/or wire fees. These are NOT garbage fees.

Real Estate companies sometimes charge Transaction coordinator or marketing fees. With the commission they receive, you should see no additional fees from your real estate company.

Keep in mind, buying a home is expensive so one or two fees may not be a big deal to your real estate agent. But if you're not careful, you could lose several hundred dollars in garbage fees.

If you see any of these fees on your estimated closing statement, contact your agent and tell him/her you would like them waived. If you are unsure, feel free to contact us.
posted by Pac Res @ 4:32 PM   0 comments

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