Off The Cuff

Housing Sales Going Down Again

Posted by: From Arkansas in Are You Kidding Me?, Odds And Ends on Feb 24 2008

Welcome back!

There have been a lot of reports on the news lately about the housing situation. Many people, too many it seems, took advantage of that great mortgage loan that would give the borrower the best deal on the interest rates in years. But the thing is that the loan was not fixed rate, it was variable mortgage. And that was seemingly great at the time but now the interest rates have gone up and the payments are sky high for many families. They are about to lose their homes. What a disaster!

Of course, I could sit here and say how stupid it was to get into such a thing since those rates were bound to go up sometime. Thing is, the loans on houses are usually for 20-30 years. Surely someone would have noticed that the interest rates would go up in that length of time, right? Actually what happened is that sometimes the borrower believed that they had all the time in the world to deal with a higher payment because they banked on a raise or a new job that would pay more in a few years. ACK!!

Sort of a better late than never tip would be…if you cannot afford a higher interest rate now, do not borrow for that house. It’s too much for you. But we dreamers do not believe that the rates would go up very soon or very high until long after that raise and new job happened. We would be comfortable in our new job in the company. But then, the light dawned as the foreclosure papers come in the mail one day. Panic sets in. This cannot be happening!!

Lesson: Do not apply for a variable rate mortgage, definitely go for a fixed rate, be sure and get mortgage life insurance in case something awful happens and sit back and enjoy the fact that your payment rate will not change as long as you stick with the same mortgage loan. I do feel bad for those who got caught up in this whole thing because it truly did look like a good idea at the time. Sometimes, it was because some slick talker talked people into such a mortgage rate. So, don’t do it! Find a nice, boring fixed rate and take it.

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