Wild & Crazy on Wall Street!

Having just come off of one of the most volatile weeks Wall Street has ever experienced, it’s difficult not to touch upon all the financial upheaval in our world right now.

With doom and gloom headlines splashed across the financial media, it's no wonder that everyone thinks we are headed for the next great depression. But among the negative press, there are definitely some positive economic signs out there; you just need to look a bit! Following are a few examples of recent positive economic developments that we can all benefit from now, and take as optimistic signs for the future.

Housing affordability at its highest levels. From 2000 through mid-2007, homes were almost unaffordable to the average American family. Buying a house in a good neighborhood and school district was hard to do without facing high debt obligations or having to take on exotic loans (creating the sub-prime mess). However, the silver lining from the housing crisis is that home prices have dropped all over the country. So for those who have lived within their means, enjoy stable jobs and have enough money saved for a 10 to 20% down payment, now is the time to find great housing deals.

Lower Oil and Gas Prices. Crude oil prices have dropped more than 25% in the last two months, and this is something we can all directly (transportation costs) or indirectly benefit from. While oil prices will probably go back up in the longer term (we’re currently experiencing higher prices at the pump due to Hurricane Ike), the current respite should help all our bottom lines.

Once-in-a-Lifetime Investment Opportunities. We have all read stories about investors who got in early and made millions from stock investments in companies like Microsoft, Apple and other well-known financials. However recently many once-high-flying companies have had their stock prices coming crashing back to earth. With across the board falls in stock markets, there are now lots of well known dividend paying stocks available at bargain-basement prices that offer the potential for you to become one of these storied investors. If you’re an investor with a long-term view, this could provide opportunities to get into some great brand name companies like Citibank, General Electric and even Microsoft at very attractive price points. When the economy does fully recover, as we know it will, these stocks will boom once again and so will the portfolios of those who got in on the ground floor.

So while it sounds like gloom and doom, once again there are a few “nuggets” of positive news.

When it's Appraisal Time

Buying your next home can be a complex process with many important steps. You will probably look at many homes before finding the right one, and then you'll submit a purchase offer. After one or more counteroffers, and after the purchase offer has finally been accepted -- congratulations, you have almost bought a home.

There are still several steps necessary, which must take place to satisfy the conditions of the purchase agreement. The first of these steps is getting the appraisal done. In most instances, your lender will only loan about 80% - 90% of the value of the loan. Then you, the buyer must come up with the balance, or the down payment. And, the key to this is still the appraised value of the property.

A licensed real estate appraiser performs this service. And the lender, in most circumstances, will want to use their own appraiser. To arrive at the appraised value of the property the appraiser will assess the property using a complex set of criteria. Technically, this value is just the opinion of the appraiser of what the property is worth, but the result of the appraisal is pivotal when it comes to getting your home loan.

If the property appraises for less than the agreed-upon purchase price, then you'll have decisions to make. The bank will probably still loan you the money, but only a percentage of it. You can still buy, but you will have to make up the balance in some other way. Alternatively, you may allow the purchase agreement to lapse and keep looking at other properties. (Remember, if the purchase agreement lapses because the property doesn't appraise to the purchase price, the buyer's money should be returned.)

If the property does appraise, the deal moves forward. Still on the agenda as you move towards closing are the home inspection and title search. But, the appraisal is the most important condition met in the purchase agreement. It can make or break the deal, depending upon the results. And once the property appraises, you are well on the way to closing. Congratulations!