Finance @ MindSay

Have you ever wondered why the standard terms for mortgages are 15 and 30 years rather than 10 and 20 or 25 and 50?  I have, but was never able to find a satisfactory answer. Then I discovered something interesting. Since this country was founded, downturns in the economy have occurred on an average of once every 14.5 years. This similarity may, of course, be sheer coincidence. But I'm suspicious.

Why?

Well, if you amortize a standard 30 year mortgage at six percent interest, you'll discover that the lender gets all of the money it has invested back in 13 years and 11 months.

Now look at what happens to a home buyer who takes out a mortgage just after an economic downturn, pays on it for 14 years, a downturn strikes, and then for whatever reason cannot sell his home and defaults. The lender gets the house and the buyer has lost all the money he/she has put into it.

But look at what happens to the lender. It has already gotten its initial investment back, so in reality it loses nothing. But now it has a house to sell. How much has the lender paid for this house? Nothing! So it sells the house to another buyer by providing another mortgage. Now if the initial buyer had continued to pay the loan to term, the lender would have earned about as much as the initial investment. But now everything the second buyer pays is pure profit, not just the computed interest. In reality, the total amount of the mortgage loan is earned interest on an investment of zero. Wouldn't you like to find a way of doing that?

Of course, such situations don't come about often. Although the average time between economic downturns is 14.5 years, downturns happen at varied intervals. And even in downturns, many people forced to sell their homes usually can. But it doesn't take many who can't to make lenders a lot of money. Just five people forced into the situation described with $100,000 loans would net a lender a hefty one million free dollars. If the loans are larger, the lender nets even more. And, of course, the numbers are different for different interest rates. But the principle is the same. Lenders almost always get their initial investments back in half a loan's term or less.  

©2009 John Kozy

The object of this blog is to share information on the best way to start a small public company. A public company can advertise to lure investors and issue shares of stock but a private company cannot. I’m looking for experiences/ideas that allowed your business to move ahead and prosper. Areas of interest are mentoring programs and overcoming the so-called “regulatory environment,” that serves more like a “business impediment environment” in actual fact. I welcome your input on this matter and look forward to it. Go here for information about a public shell company . Here's another article about IPO (Initial Public Offerings).

Every body is after Recession Proof Stocks and indeed is there such a thing as recession proof money?. With today’s sparkling (well OK better than expected) results from the UK leading Grocer Tescos where UK like-for-like sales are according to Andrew Wade of Numis  "marginally better" than expected, and UK margins are a touch ahead of expectations, However, possibly the only small blot on the horizon might be that fact that the group's net debt of GBP9.6B is pushing interest costs up, he adds.

Tesco apparently plans to cut net debt in the current year by lowering capital expenditure, selling some property, reducing stock levels and other improvements in working capital. Numis also expects to cut forecasts by around 5% for FY' 10, due in part to Tesco's net debt position. Numis is also reviewing its 420p target price and retains a buy on the stock. Shares closed at 332p Monday.

As of the time of this posting, its shares were trading around the 349 in early trading in London.

For further details see recession proof finances, recession proof mortgages, investing a recession.

There was further progress for the FTSE 100 to end the week, as it began what should be its final bear market rally if you are a bear, and starts to accelerate to the upside if you are a bull.

Either way there is resistance from the top of the February ascending price channel at 4,200, but above that one can probably expect a quite direct spike towards the black 200 day moving average at 4,500 plus. Either way, common sense trading will keep you right.

Only below the blue 50 day moving average at 3,913 on an end of day close stop loss basis would now even begin to suggest failure.

Trading with the Index as opposed to trading against it in these situations does help.

As far as Forex Investment Strategies were concerned the US dollar closed down 0.7% at Y98.87 and up 0.2% at $1.2999 against the euro. This would tend to dictate which Free Forex Strategies and any Free Forex Trading Strategies that you would care to try to map out. WTI lost 8 cents to $49.69 as Gold lost $5.2 to $869.8 oz.

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Foreclosure redemption period

If you are like lots of Americans today, you will be upsetting if you will one day have to face a mortgage foreclosure. March 2008 sailed in with a evidence of 900,000 houses going through foreclosure. These staggering numbers will panic anybody, homeowners, investors, politicians, and economists similar. There are ways to avoid from losing your home and in turn your life and everything you have worked for. The organization called Twin Cities Habitat for Humanity Mortgage Foreclosure Prevention Program (MFPP) for example is one of the organizations that assist people facing a mortgage foreclosure hoard their homes. One of the most important things they strain is to know the law and to know your rights. Many people take for approved whatever their bank or lending institutions tell them regarding a mortgage foreclosure. The lending institution will tell them that once the position has been prepared to the sheriff’s office they must leave the property right away and thus depart their hopes and dreams behind. Such is not the case in various states throughout the USA.

Foreclosure redemption period

Some states, such as Illinois and Minnesota have a redemption period where a homeowner can still hold on their home and thus shun a mortgage foreclosure The elegance period for will differ from state to state ranging from 3 days to six months. If you live in the state of Minnesota, for example, you may be capable to clear up your back payments in the six months period that they allocate before finishing the mortgage foreclosure and losing your house. Any sensible homeowner would be sensible to check into their state laws and find out if their state carries a foreclosure redemption period and how much flexibility will this period assign them for coming up with the payments in debts. It is also significant to note that where the redemption period is positioned can also make a difference to how your particular mortgage foreclosure will affect your life. Though the redemption period is forever before the expulsion, some states make it easier by placing the redemption period before the sale while others allow a redemption period only after the auction. If the house is sold, the added fret of dealing with the new owners is very traumatic on already bothered homeowners, who may feel that all is lost and must leave the property at all cost. Do not let the new owners annoy you and tell you that you have to leave the property right away so that they can shift in. If you live in a state that permits the redemption grace period after the sale, they cannot by force throw out you by law. You are the one who is sheltered by law. You do not have to leave the property right away! You can use the whole time selected by the redemption period to try to come up with the funds, or if you know you cannot do that, you can take that time to find physically appropriate lodging.