So anyways,


The bottom is about to fall out from underneath American homeowners in the next 6 months (the process started last year, but is really kicking in this year). Subprime loans are loans that start off cheaper in the beginning, but go way up after the first year or so. Homeowners normally take subprime loans just to own a home, and build equity for the next house, because you could sit on your house for the first year, then sell it (was VERY easy to sell before last year), and the home would often make you anywhere from 20 to 100k towards your next home.

But now the home market has slowed down, so houses are sitting on the market, often for up to a year, and people are having to default on their loans.

I'm not in a subprime situation, and doing just fine on my mortgage payments, but its got me curious---his my home value (which is twice what it was when I bought it 5 years ago), going to drop dramatically? Should I just sell my house now, then use the equity to buy another one flat out if home prices slide downwards to year 2000 levels?

I've never had to consider shit like this before....

Cloudbuster said:

You ass.

sit on your house for long term investment,
prices will begin to climb again once the market stabilises,
then you will be in a position to release some equity and
invest in another property..

so dont sell it..

eraclito said:

A good alternative would be .

Cloudbuster said:

Now i know how all those helpless orgers felt.

eraclito said:

I have some experience in home loan lending, and I say this is good advice. If you have an adjustable loan on your home, and you can afford it, get a fixed rate NOW!!!!

gemini13 said:

Cloudbuster said:

Thanks Karla!



cloudy!

Imago said:

Harder, bitch. HARDER!

as a person in the industry - you have to realize - just like investing in the stock market ... gold market , etc ... INVESTMENTS should be long term ...

in the past few years - in the Real Estate industry - we have had a influx of "immature" investors in my opinion - some of them led on by the shows "flip this house" etc --- who believe --- oh .. i will buy this for 50K ... put 10K into it .. and flip it for 120K or whatever .... I am NOT saying this is impossible or i have not done it myself --- HOWEVER ... in a up up up market it isnt as tough to do that ----- in a slightly down market or a sideways market .... guess what ..... oops ....

i think your "subprime" loans definition is off .... i think it applies to anyone getting a loan that is either NOT qualified because they dont make enough money to qualify (and there fore in that case usually put more $$$ down and/or get a higher rate) ----- OR ----- they dont have the best credit - and they are forced to take a higher rate , etc ....

the worst loans - and this has been touched on .... but i am fearful for the loans out there that are ONLY INTEREST loans .... meaning .... you make payments on them for 2-5 years and guess what ... u still owe the same amount on them ! .... of course they are based on the idea you mentioned --- that the 150K house will now be worth 200K or more .... BUT ... as we have mentioned .... houses are NOT always guaranteed to keep going UP UP UP ...

i personally am in a very conservative market ... the type that just goes up 3-5% a yr ..... my sis lives in FLA ... at times her market goes up 35-40% ----- then drops .... the same .... so imagine ... you could buy a home for 400K and a year later that home would only be worth 340K .... oops ....

Cloudbuster said:

I'm afraid that won't help.

gemini13 said:

How about several of them?

Cloudbuster said:

Several tubes?



Nope.

Imago, would you be my sugar daddy?

Imago said:

imo this all began right after 9/11. remember how nervously everyeon wondered whether there would be a recession? and then it was announced that,. because consumer confidence was strong as refelcted in home-buying, the economy was all right?

and NOW it's finally coming to light why consumers were so confident. funked up loans offerd to people with shaky credit. the really awful thing is that a lot of these subprime mortgages were bundled up and sold as investments like mutual funds, stock, etc. so investors will take a hit too

i think it will get worse before it gets better.

i have thought like that also - doom and glooms , etc ...

however - just to play alil devils advocate - in my market for example - people are hesitant in the past 3 months or so to buy .... not sure of the value/prices etc .... but i do see and hear from real estate agents that the market is going well this month ... which to me ... with rates LOW , etc ... we could be in for another 10%- 20% rise in values .... i still think housing is a good buy - around me at least ...

if you remember - the markets were messed up prior to Bush getting elected ... the first time vs Gore --- in my opinion ... its the reason Bush was elected .... Gore would have stomped him with the Clinton years to show ... but they dipped before the election - probably just a correction ...

then after 9/11 they were off again ...

now today - we have alot of mortgage people in the industry that had it VERY EASY for about 3-5 years - low rates- good jobs, etc .... now they are HURTING to make loans .... and it is forcing some of them to find new jobs cus it is alil slow .... but i dont see it as staying too slow ... mainly due to the fact that the economy is doing well ...

Can you afford to sit on your mortgage? If you can, then by all means, do so.

Can you bargin for a better rate? Possibly. It's worth talking to your favorite bank Loan Originator. You might be able to save some money per month, even after the fees for re-structuring.

But really, what it all comes down to is "Do you have a buyer"

Even when houses were flying off the street left and right, there were homes that could not sell for what was being asked. On the same token, even in this soft market, there are houses that are still moving and for the price that the sellers are looking for.

If you're looking to move out of your house and into another house, remember that means that not only are you the "unlucky" seller who might not get maximum profit on your sale, but you are soon to become the "lucky bargin" buyer who has the "pick of the litter" (so to say).

Honestly, this is a good opportunity to move into a nicer neighborhood into a house that won't sell because it needs work. If you're not afraid to buy a home that needs another $15K investment on windows, flooring, siding/paint, etc., you should be able to get a great deal. If your credit is good, Loan Originators are going to bend over backwards to make sure you get financed for such a thing. You might not get the best rates of the decade, but you will still get the funding. I recommend giving Community or Regional based banks a crack at it. It helps keep the monies closer to home, as well as them being a lot easier to work with in the future.

Does this mean house prices will go down and I might actually be able to buy something by myself??

When I read this thread I feel like im on HGTV or watching CNN on asunday morning.

Ribbed4UrPleasure said:

CarrieMpls said:

Yes. Due to that crap all interest loan which was set up to cause failure in the first place.... The repo market will be teaming with great buys in the next couple of years.

D. is right Dan, just sit on your home for a good while....
Its all cyclic anyway. Most nearly the economy runs on a 7 year rotation. Nothing new under the sun.

Have you heard of NACA? They're some badass motherfuckers. You may not qualify since they serve low-to-moderate income homeowners and buyers, but check them out. The CEO is a former union activist who has rallied hardcore against predatory lenders.

http://www.naca.com/index_flash.pbl

Marks moved from union activist to Executive Director of the Union Neighborhood Assistance Corporation (UNAC), where he used his finance and organizing experience to be the first to expose predatory lending and its devastating impact. Marks led the fight against the predatory lending practices of major New England banks. For two and a half years Marks and UNAC researched their predatory lending practices before releasing the research, which focused on Fleet Bank, to the public. The extensive research in Massachusetts, Georgia, Florida, North Carolina, Michigan and other states documented Fleet’s predatory lending practices in which they targeted home owners who were property rich but cash poor. As Marks expanded the advocacy and housing services nationally, the Neighborhood Assistance Corporation of America (NACA) was established.

After a four and a half year war with Fleet, Marks was instrumental in negotiating an unprecedented settlement. Fleet committed to an $8 billion reinvestment program for low and moderate income people, settled lawsuits in Georgia for hundreds of millions of dollars, and provided $140 million in an unprecedented mortgage program to be administered by NACA.

Imago said:

I guess if you're going to "sit on a house" you might need


M

MIGUELGOMEZ said: