Should I Cash In on My Home Equity and Refinance My Current Mortgage Before the Bubble Bursts?
A report in the Los Angeles Times shows, When the price of houses in California soared 17 percent in 2003 and 22 percent in 2004, Sexual Vitality curious thing happened: Instead of homeownership decreasing because fewer people could afford houses, it rose to record levels.
Basically, people in Californian use interest only and payment option loans to purchase Quetiapine home tax incorporated they can actually afford and the game gets dangerous, when FMV (fair market value) starts to drop. Abundant foreclosures could spark a downturn in the entire housing market, leading to the long-feared bursting of what some call a housing bubble, shows Streitfelds LA Times article.
An article in the San Diego Union Tribune, shows higher interest rates stopping prospective home buyers from signing on the bottom line. Those trends are forcing home owners to drop their prices.
The Federal Reserve shows, homes' appraised value made up 145% of nominal gross domestic product in March, while stocks and mutual funds were worth 82% of GDP.
The plan is Patty Duke Show the feds to keep raising rates until inflation comes down. says mortgage broker Mike Johnson. Expect higher interest rates for refinancing and home equity loans through 2006. The balance of the bubble means as interest rates climb, those adjustable interest only mortgages climb as well. Two percent interest jump equals a 40% percent higher payment. If home prices start to fall, when those interest only loans convert, homeowners face a full amortization on a principal amount possibly higher than the homes actual FMV. In other words, they get locked into the loan. Refinancing wont help because theres no equity to borrow, or if housing prices drop, they
As interest rates climb, more than one mortgage expert suggests homeowners find a way to refinance using a fixed rate mortgage. Chances are you probably have equity built up in your home. You may want to consider pulling the equity out now in case home prices plummet. Lava Lamps the very minimum set up a home equity line of credit. Lock in a fixed interest rate, invest the equity, and use the cash to off set a possibly higher payment. Then if the bubble doesnt burst, and interest rates drop while housing prices soar... Refinance!
Nick Rian is an award-winning journalist who has written many real estate and home financing articles online. You can read more of Nicks work at Home Equity and Second Mortgage Loans and get more information about refinance mortgages. Look for current interest rates Second Mortgage Refinance Loans or California Home Mortgage Loans if you would like to speak to a loan professional for a cash out refinance loan.
posted by biibj @ 4:37 AM
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