Mortgage Blog

This is the second part to my previous post dealing with the current mortgage crisis:

Even though we are right in the middle of a historic mortgage problem, there is some light at the end of the tunnel. The reason to be optimistic is that the large majority of the problem sub-prime loans were obtained in 2003 through 2006.  Most of these loans had an initial 2 year period with the low payment and the low interest rate.  The payments and interest rate would increase dramatically the start of year 3. 

In late 2006 and early  2007, lenders quickly dropped these loans when they saw the foreclosure rates soaring.  Since access to these loan programs were greatly reduced, there will not be as many homeowners with large payment increases in the near future.  These problem loans should run their course.  With dwindling numbers of foreclosures, our housing markets should stabilize and rebound a bit.  Especially when investors determine that home prices have hit bottom.

I do not believe that our housing market will have large appreciation gains like we have seen in the past few years.  Mainly because we will not have as large of a pool of potential buyers for property.  The days of buying a home with zero down payment and the only qualification being that you could "fog a mirror" are over.

We have already made great strides in the lending industry to allow home loans only to people that can qualify based on their actual income, assets and credit history.  It is a refreshing throwback to the way things used to be, before the banks went crazy with these easy qualify programs.

MARKET UPDATE

Interest rates for a 30 year fixed mortgage are ranging anywhere from 5.75 to 6.375%  depending on the amount of closing costs you pay;  15 year fixed mortgages are ranging from 5.5% to 6.0%.

Rates are still quite a bit higher than 4 weeks ago  -  we have had an increase of approximately .5 %  The main reason given is the fear or threat of inflation.  Inflation has risen due to increased oil prices, which is in turn increasing the prices of food, energy and just about anything that is shipped and or produced using petroleum products, (just about everything).  We do not expect rates to move lower until there are some signs that oil prices stabilize or decrease.

As always this is just my opinion, I welcome your's as well.

That's all for now, have a great 4th of july and I will post again next week. 

Kevin