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 »
Home Buyers: Keep Your Eyes on Both Prices and Mortgage Rates
By Richard BarringtonNFNS Columnist
Shrewd shoppers love
a bargain, so it is natural for some prospective home buyers to sit back and
wait as home prices fall. Certainly, the end of the housing bubble is good news
for new buyers, and prices may have a long way to go before they stop falling. Still,
it doesn't pay to be too passive, and prospective home buyers should be eyeing
both falling prices and falling mortgage rates for an opportunity to jump into
the market.
Mortgage Rates and New
Home Loans
When buyers start sizing up the housing market, one of the
first things they figure out is what price they can afford to pay. From that
point on, this target price remains a focal point of most searches.
The fact is, the target price is a moving target, because it
is only one component of how affordable your new home loan will be. The other
component, of course, is interest rates. Instead of focusing so much on price,
prospective buyers would do well to figure out what monthly new home loan
payment they can afford.
Since this new home loan payment is a function of both price
and mortgage rates, as mortgage rates fall, the target home price can afford to
rise, giving the buyer more latitude.
Refinancing Activity:
An Indicator of Falling Rates
One clue that mortgage rates are at relatively low levels is
that refinancing activity has perked up. For all the news about the troubled mortgage
market, mortgage applications have been at high levels lately, and much of this
is driven by refinancing activity. While there can be other reasons for refinancing,
as a general rule refinancing activity increases when mortgage rates have
experienced a significant drop.
If prospective buyers factor in both falling home prices and
falling mortgage rates, what they are likely to find in the current market is
that the new home loan they can afford will buy them more house than they had
previously thought.
Source:
Mortgage
Bankers Association
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.