12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Time to Consider a Home Equity Mortgage?
By Richard BarringtonNFNS Columnist
The mortgage market
can seem like an intimidating place at times, and with all the recent bad news
about mortgages, homeowners might wonder if this is the right time to consider
a home equity loan. The fact is, not only shouldn't homeowners shy away from a home
equity loan, but they might think of this as a particularly good time to
consider one. Ironically, many of the same conditions that are making it tough
on some mortgage holders -- i.e., falling home prices and a slowing economy --
make this a good time to pursue a home equity loan. The only issues are to make
sure your credit is in good shape, and you have budgeted carefully for the
additional payments.
Mortgage Rates Have
Fallen
How can a slow economy make this a good time to apply for a home
equity mortgage? Well, interest rates
tend to fall when an economy appears to be getting weaker, and mortgage rates
are no exception. The attempts of the Federal Reserve to stimulate the economy
by lowering short-term interest rates have been widely publicized. More
quietly, mortgage rates have been falling steadily since the middle of last
year.
How much have mortgage rates fallen? By mid-January, they had reached levels not
seen since the spring of 2004, and are near the low end of their historical
range.
Home equity rates are higher than primary mortgage rates,
but they are based on many of the same factors. As interest rates in general
decline, mortgage companies have more room to offer lower home equity rates.
Mortgage Companies
Will Be Glad to See You
Speaking of mortgage companies, aren't they gun-shy about
new business when they've got so many troubled mortgages on their hands? Not if you have good credit. If you have good
credit, mortgage companies will be glad to see you. The only way mortgage
companies can start to work through some of the bad debt they have on their
books is to begin to replace it with higher-quality loans.
Your current mortgage company might be a good place to start.
If you've been steadily paying your mortgage over the years, they should be
very confident in doing more business with you. However, don't limit yourself
to your current lender. Other mortgage companies will also view your positive
repayment history as a plus, so let multiple firms compete for your business.
Raise the Value of
Your Home the Old Fashioned Way
Finally, consider a home equity loan as a way to make the
best of a bad situation. For years, homeowners got used to rising market prices
automatically boosting the value of their homes. In many regions of the
country, this free ride may be over, at least for the time being. However,
there are other ways to add value to your home: a variety of home improvement
projects can make repairs, upgrades, or additions to your property that will be
valued by the marketplace.
Source:
Freddie
Mac
About the Author:
Richard Barrington is
a freelance writer and novelist who previously spent over twenty years as an
investment industry executive.
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.