Housing, Mortgages and the Wall Street Mess

For any of us with any type investments, current developments in the financial markets have to be scary. Over the past few weeks we've seen government takeovers of mortgage giants Fannie Mae and Freddie Mac, we've watched powerful organizations like Lehman Brothers slipping into bankruptcy, Merrill Lynch on the brink of collapse and global giant AIG now being rescued by the Fed at a cost that could eventually go over a trillion dollars.

At the root of it all is housing and the "mortgage mess" as Treasury Secretary Henry L. Paulson has reminded us. These occurrences may leave some of us wondering if there ever will be a bottom to housing prices. It seems that each time we think we've taken one step forward, it's actually two steps back. We don't know how or when these events will end nor do any of the so called experts. We do know what the problems are and in hindsight why more continue to surface.

Now may be a great time to find out individually what can be done in order to help reduce at least some of our exposure to financial risk. The problems that some risky mortgages have caused hopefully have taught us all a lesson about interest rate risk. This is something that can be controlled by applying for a fixed rate loan. If your taking a new mortgage a fixed rate means no risk of interest rate changes. If your in an adjustable now you may still have enough equity in your home to refinance it into a fixed rate. Here's a little nugget for anyone with a little extra but not inclined to invest it in anything right now. If you put extra money beyond the monthly mortgage principal payment you effectively earn yourself 6% by ridding some of that debt. An added bonus is that the mortgage will zero out sooner. Keep in mind that any added equity you put toward your mortgage may not be recovered easily as lenders continue to tighten up on home equity loans. It may make more sense to pay down other credit or add some more to a your employers 401k contribution, if your fortunate enough to have one.

Give me a call at 561-306-6736 or send me an email if you need some help buying or selling a property, obtaining a new mortgage or refinancing an existing mortgage.

You can always find loads of info on buying, selling and financing at ges-realty.