Daniel Gershburg

The fact that there are mortgage brokers out there, who got into the business to make money only when they determined that there was an influx of people looking to purchase property does not surprise me.  The fact that mortgage brokers are still charging, and people are still paying, ridiculous hidden fees and “points” does.  One of the firms clients had this very issue come up recently with respect to a mortgage they applied for.  While the broker claimed he did not charge them points, he nevertheless took it upon himself to charge thousands of dollars to “Lock In” the clients interest rate.  While these lock in fees typically occur, the underlying reason why one would charge such a high fee, in my opinion, is to make sure that client does not leave to another broker.  Having said that, if your mortgage broker is attempting to hold you hostage (again my opinion only) by charging  tremendous fees and hoping you wont back out of the deal, perhaps this isn’t the mortgage broker you should be doing business with.How do you avoid the above scenario?  It’s not as easy as one may think.  Many people agree to such fees because they think that every broker out there charges them.  However, before signing up, one should always do their homework.  Ask family and friends for recommendations.  Also ask the broker for past clients who would recommend them, , and FOLLOW UP on these recommendations!   Finally, sit down with your attorney to determine whether or not the fees that are being charged are legitimate, and more importantly, acceptable to you.  There are so many great brokers, lenders, etc. out there, so don’t just decide on the one that gives you the best rate.  Decide on someone you can trust.

Just read an interesting article on new legislation that would help consumers tremendously when deal with credit card companies whose fees and interest skyrocket for no reason.  Check out the link.  http://www.cbsnews.com/stories/2007/03/07/politics/main2543923.shtml

A story published recently details how more and more Americans are beginning to tap into their Retirement plans (401(k), IRA, etc.) to pay for their everyday expenses, including their mortgage payments. I recently was asked to give a lecture for Lawline.com, a great company which provides continuing education for lawyers, dealing with this specific subject. Needless to say the conclusion that almost everyone has agreed upon is that using these retirement funds to pay for a mortgage an individual cannot afford is an incredibly dangerous proposition for the long term, and is almost certainly postponing the inevitable.

First and foremost, the money that is being withdrawn loses most, if not all, of the tax benefits it would have enjoyed in the shelter of a retirement account. Second, the money that was supposed to allow these individuals to retire has now been spent. Meaning these individuals will likely have to postpone their retirement (working harder and longer at a time where they should be enjoying all the fruits of their hard work) or they will be living a much more frugal lifestyle in retirement. Certainly social security checks, which are already abhorently inadequate to meet the needs of the elderly, will not be able to save these individuals later down the road. Lastly, it is likely that the individuals who took money out of these accounts will likely never pay it back, further depleting their nest egg.

We are now living in the aftermath of the credit and leverage era. An era where you were able finance up to 110% of a homes “value” (which was liberally calculated in the first place.) The binge is now over and the hangover will last for quite some time for many unfortunate individuals. Now lets put the gloom on hold. Because there is a great lesson to be learned from this. Purchase a home you can afford (not one you think you will be able to afford two years from now), do not procure an exotic mortgage of any kind, and make sure your credit score remains as high as possible to avoid being caught in this situation. There are still many great opportunities to purchase a home all over New York and New Jersey. If you have the funds saved and know you can afford to get into the market, now is a great time.

This office is ready, willing, and able to assist you in determining whether or not you should purchase a particular property, before even signing on the dotted line. We will walk you through the entire process, step by step, to make sure you are anything but a statistic. More importantly, we will do everything we can to ensure that the home/condo/co-op you purchase will be an investment, not a liability that will require you to tap into funds you have saved for so long.