Wednesday, December 5, 2007
Is it a good time to buy or refinance?Today's real estate market is a very volatile environment. Part of which can be attributed to an ever growing number of foreclosures which in effect has caused the credit crunch. This squeeze on money is forcing lenders across the board to tighten parameters, end their “high risk” lending, or even putting them out of business all together. Why are we here? Many of today's homeowners were able to attain financing in the last 3 – 5 years at great rates while having little to no money as down payment or in the form of equity. Several of these buyers had challenged credit and were only afforded a subprime two year adjustable rate mortgage (2/28 ARM), the traditional high risk loan. Rather than working to repair there credit many expected home values to continue to increase and banked on being able to do a future refinance. Unfortunately, we've learned that values certainly haven't increased nor are there programs available to the credit challenged that were once abundantly found. Now homeowner's can't refinance because they owe the bank more than the home is worth or they don't qualify for any programs. Now what? Consult with a mortgage originator and learn what options are possibly available. The government has stepped in and is offering new programs to help and many banks are becoming increasingly competitive – there maybe an option for you. Otherwise, selling your home is the alternative but that presents problems as well. With an overstock of properties currently available many folks can't sell for the amount they need to payoff their mortgage or at all. Yes, it's all doom and gloom but we're assuming the worst situation here! There are other “out of box” options I'd share by request. What if your situation isn't bad? If you're on an ARM and plan on moving before it adjusts then stick with what you have however if there's any uncertainty then it's a good idea to consider a refinance to lock into a fixed rate mortgage. Plans can change and it's important that you have stability with the largest investment of your life. Payments increasing from $50 on up can push some budgets over the limit and result in unfavorable circumstances. With rates as low as they are it's a great time to refinance! To buy today is without question a great idea! It's a buyers market and good deals are a time a dozen. For more information or questions related to this month's industry insight call or email Zachary.
Zachary Kraus
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