I'm adding a new category on the sidebar; Lazy Day Sunday. A few times a year, I link to some well-written mortgage advice from folks across the country. Here's the inaugural offering of Lazy Day Sunday:
Rhonda Porter, from Seattle, talks about why declining values are good for borrowers and bad for homeowners, looking to refinance:
If you're a home buyer in this market, you're in the drivers seat...and sitting pretty at that. Listings are up 18.3% in King County (condos and houses) as compared to August of 2007; giving you plenty of choices. Sellers are more likely to contribute towards your closing costs and prices are more attractive than recent years.
Dan Green, from Cincinnati, outlines why the Wall Street collapse has been great for mortgage rates:
The government's takeover of Fannie Mae and Freddie Mac rendered mortgage bonds among the safest investments in the world. Therefore, when political or economic uncertainty exists, mortgage rates should fall in safe haven buying.
Bob Ashby, in Florida, shows that while you may not have a mortgage against your home, you might not REALLY own it:
Part of the reason you can never truly “own” your home is that the government can take your home, basically whenever they want. That power was given to them through imminent domain laws. Typically, the government pays you off to take your home, but that may be below market value, creating loss of home equity, not to mention the fact you have to find another place to live.
On the other side of Florida is Dave Shafer. He shows us that ARM holders are faring better than their fixed-rate counterparts (even after the rate adjustment):
Interest rates are so low that many of those variable rate loans that are resetting this year are doing it at or below their current levels. So those that follow the strategy of using variable rate loans (they have inherently lower rates than 30 year fixed rates) have saved themselves thousands of dollars in interest!
Tom Vanderwell, our midwestern mortgage banker friend, reports that all is..well,as well as can be expected considering the virtual nuclear bomb that exploding on Wall Street this week:
So how do things look from here for the housing and mortgage market? A couple of observations:
1. Due to the massive amounts of money that the government is going to have to borrow to fund all of this intervention, I don’t see mortgage rates dropping lower. I expect that we’ll see “relatively stable” rates in the near future but 6 to 12 months from now, I anticipate that it’s going to be more expensive to borrow money than it is now.
2. I believe that we are going to continue to see credit requirements tightening for not only mortgages but virtually all types of credit. I think one lesson that was learned from this week is that “we” (collectively) made credit way to easy to get and it came back and bit us in a BIG way.
3. While I think this action by the government stabilized the credit markets, I don’t believe it put a bottom in the housing market. The only way that they could do that is for them to…… (I’m not even going to go there!) I think we need to continue to work through and eventually burn off the excess inventory until we reach a bottom and then things will start building back up.
All good articles about this week in mortgages, from around the country. My SoCal readers know that I can suffer from "tunnel-vision" here in the eye of the credit hurricane so I want to offer some other opinions.. I hope you'll enjoy this "new" feature.