You Don't Have To Loose Your Home

A national survey recently by the Mortgage Banks Association found that almost 50% of the people who have lost their homes to foreclosure never once contacted their lender.

That is probably the worst error a homeowner can make when they are having trouble making their mortgage payment.

There are scads of programs out there to help distressed homeowners work out SOLUTIONS to their payment program. Here are a couple ...

- Guide to Avoiding Foreclosure (U.S. Department of Housing and Urban Development)

- The HOPE NOW Alliance and the Homeowner’s HOPE Hotline (1-888-995-HOPE)

If you know anyone who is in mortgage trouble or is heading in that direction, have them look at the two links above or at least call their mortgage lender.

Help is available.

Richard

Phoenix Home Market Update for September 2008

We got a briefing today from our affilated mortgage company regarding future trends for the Phoenix area.

Our home pricing trends will be affected by several recent news items. First is a news item I heard on the radio several days ago announcing that a record number of "foreclosure related" letters will be going out to Phoenix area homeowners this month.

Second, the federal downpayment assistance programs for first time homebuyers are going away on October 1 of this year. And third, about 5,000 adjustable rate mortgages in the Phoenix area will be resetting before December.

All this adds up to fewer buyers eligible for loans and mortgage payment increases for 5,000 additional home owners.

So, it ain't over yet. Predictions are currently that the downward pressure on home prices will continue through most of 2009.

Two bright spots showed up however. Since the Fanny Mae and Freddie Mac takeovers by the government, mortgage rates have fallen back into the high 5% area. And, there are a lot of very good buys out there for homes. You need to be selective but you can find very good buys on good homes if you look around.

You takes your positive news where you can get it.

Contact me if you have questions that are specific you your particular home or financial situation.

Richard

Will Fed Interest Rate Reduction Affect Mortgages?

Yesterday, the Federal Reserve voted to decrease the discount rate by half a point (50 basis points). Wall Street responded with a 300+ increase in the Dow Jones Industrial Average. (DJIA). Good news for the economy but is it good news for mortgages and the housing situation?

In a couple of words, not directly.

Mortgage rates are determined more by the Bond Market prices rather than the Stock Market (or interest rate reductions per se). However, when Stocks go up Bonds usually go down. This is because investors see a better opportunity to make money in the stock market and switch their money from bonds into stocks.

Also, when the stock market goes up, the value of 401Ks and other investments increase, improving the creditworthiness of potential borrowers.

So there is a beneficial effect but not a direct one.

It will take a couple of weeks to see how much of an effect the interest rate reduction will have on the availability of mortgage money. But it certainly is better than nothing.

Unfortunately, new home builders are still offering steep discounts on their new inventory homes if you can close quickly. Until that stops, resale homes will have to compete in this unusual market (see my post "Light At The End Of The Real Estate Tunnel?" on this Blog).

Comments welcome.

Richard