Interesting things in the housing market

Jack Shephard · #1 03-25-2008, 12:24 PM

I live in AZ which has had an unbelievable drop in the home values. I know every where has been dropping some higher than us and some lower. Our average % of home value dropping is about 25%, again this is an average some high and some low. Interesting things are happening here. Not only are people walking away from their homes because they are upside down in balance owed verses value of the home. Some people are now burning their homes in hopes to obtain the insurance money and move on. Most if not all the homes are taxed higher than what the current values are right now. The county assesors have not done many if any new tax appraisals. The point of this thread is this kinda stuff going on in your area too? What have you noticed? I am a mortgage officer and I can not tell you how many people I talk to have no equity.
What say ye!?!?!?

ReformedDave · #2 03-25-2008, 12:30 PM

Quote:

Originally Posted by JTULLOCK

I live in AZ which has had an unbelievable drop in the home values. I know every where has been dropping some higher than us and some lower. Our average % of home value dropping is about 25%, again this is an average some high and some low. Interesting things are happening here. Not only are people walking away from their homes because they are upside down in balance owed verses value of the home. Some people are now burning their homes in hopes to obtain the insurance money and move on. Most if not all the homes are taxed higher than what the current values are right now. The county assesors have not done many if any new tax appraisals. The point of this thread is this kinda stuff going on in your area too? What have you noticed? I am a mortgage officer and I can not tell you how many people I talk to have no equity.
What say ye!?!?!?

It is a problem in SoCal. Fortunately I purchased my home when the market was still fairly low and I have a 30 year fixed 5.85% loan. So even if the market continues down for a while I hope to be OK.

BTW, if the interest rate continues to fall how low should it go before one refinances?

dizzyde · #3 03-25-2008, 12:35 PM

Our housing market has nose-dived, we have some major developers in our area who are having to sell off property that they bought a few years ago at losses up-wards of 10 to 15 million dollars.

What is horrible is some of the major players in our local real-estate market are now being arrested for frauds they perpetuated when the market was booming. It is a mess.

Rico · #4 03-25-2008, 12:42 PM

Quote:

Originally Posted by JTULLOCK

I live in AZ which has had an unbelievable drop in the home values. I know every where has been dropping some higher than us and some lower. Our average % of home value dropping is about 25%, again this is an average some high and some low. Interesting things are happening here. Not only are people walking away from their homes because they are upside down in balance owed verses value of the home. Some people are now burning their homes in hopes to obtain the insurance money and move on. Most if not all the homes are taxed higher than what the current values are right now. The county assesors have not done many if any new tax appraisals. The point of this thread is this kinda stuff going on in your area too? What have you noticed? I am a mortgage officer and I can not tell you how many people I talk to have no equity.
What say ye!?!?!?

The mortgage crisis has been especially tough the further West one goes in the country. Calfornia and Nevada have really been hard hit, along with your fine state. The recent changes in immigration laws in AZ have not helped the situation on bit either.

Jack Shephard · #5 03-25-2008, 12:55 PM

Quote:

Originally Posted by ReformedDave

It is a problem in SoCal. Fortunately I purchased my home when the market was still fairly low and I have a 30 year fixed 5.85% loan. So even if the market continues down for a while I hope to be OK.

BTW, if the interest rate continues to fall how low should it go before one refinances?

Here is the thing about refi'ing, rate change daily it seems so best rate to day is a low rate tomorrow or a high rate tomorrow. I feel the most important thing is to have a plan on what you want to accomplish. Example, if you want to refi JUST to get a better rate and payment consider what it will cost you (closing cost, appraisal fees, etc.). However if you have debt and need to refi to get cash out it might be worth holding your rate (which is very good right now) and taking a second mortgage. There are so many options out there for Home Equities that it is almost a can not miss thing. HE are also good for home improvements. I mainly focus on the HE as oppose to primary mortgages.

So Dave, if I were in your shoes and want to refi I would first count the cost of doing business and second make sure you have a clear plan on why you want to refi or get a second mortgage. The thing you do not want to do is get a secong mortgage or cash out refi and end up being in debt for more than the homes value. But again I believe you have a great rate and with out paying some sort of cost to buy it down you might just want to stay where you are, unless you can refi for a shorter term. If you go from a 30 yr to a 15 yr and have a slight rate difference and you can afford the payment that is what you want. Be out of debt sooner and then make you money and home work for you.

ReformedDave · #6 03-25-2008, 12:57 PM

Quote:

Originally Posted by JTULLOCK

Here is the thing about refi'ing, rate change daily it seems so best rate to day is a low rate tomorrow or a high rate tomorrow. I feel the most important thing is to have a plan on what you want to accomplish. Example, if you want to refi JUST to get a better rate and payment consider what it will cost you (closing cost, appraisal fees, etc.). However if you have debt and need to refi to get cash out it might be worth holding your rate (which is very good right now) and taking a second mortgage. There are so many options out there for Home Equities that it is almost a can not miss thing. HE are also good for home improvements. I mainly focus on the HE as oppose to primary mortgages.

So Dave, if I were in your shoes and want to refi I would first count the cost of doing business and second make sure you have a clear plan on why you want to refi or get a second mortgage. The thing you do not want to do is get a secong mortgage or cash out refi and end up being in debt for more than the homes value. But again I believe you have a great rate and with out paying some sort of cost to buy it down you might just want to stay where you are, unless you can refi for a shorter term. If you go from a 30 yr to a 15 yr and have a slight rate difference and you can afford the payment that is what you want. Be out of debt sooner and then make you money and home work for you.

Great advice. I'm holding but I might consider a 15 yr. fixed.

RandyWayne · #7 03-25-2008, 12:57 PM

We are one of the few people are benefiting greatly from this drop in prices.
We're preapproved for our mortgage loan, but the interest rate isn't fixed until our closing date. We will be getting a 30 year fixed which should be under 6%. We WERE going to plan to pay it off early but have been running numbers and when adding up the mortgage tax benefit combined with putting money away that would have went to paying the mortgage down, we come WAY ahead paying the min mortgage payments and reaping the other awards.

Jack Shephard · #8 03-25-2008, 01:08 PM

Quote:

Originally Posted by RandyWayne

We are one of the few people are benefiting greatly from this drop in prices.
We're preapproved for our mortgage loan, but the interest rate isn't fixed until our closing date. We will be getting a 30 year fixed which should be under 6%. We WERE going to plan to pay it off early but have been running numbers and when adding up the mortgage tax benefit combined with putting money away that would have went to paying the mortgage down, we come WAY ahead paying the min mortgage payments and reaping the other awards.

This is good as long as there is no predisposition with you paying the minimun payment. What I mean is if the minimum is an interest only or IO payment(pmt) it is worth while to know if the bank will take from the equity in the home to make it a full mortgage pmt. These types of loans are what have killed some people. Now this does not sound like what you have going on so you are probably safe. It is important to have money in your pocket, but if you are doing that at the expense of not paying the mtg off early then it might not be the best thing. RW of course the goal is not to stretch yourself too thin. No one answer works for everyone ya know. If it were me I would need the extra money, but for others being out of the mtg earlier is more appealing. It is definately a buyers market, if they can qualify for the loan.

Jack Shephard · #9 03-25-2008, 01:11 PM

Quote:

Originally Posted by ReformedDave

Great advice. I'm holding but I might consider a 15 yr. fixed.

Yeah cutting time off the mtg considering you can afford to do so is the ideal place to be. I can not tell anyone enough be debt free if at all possible. There is no feeling like it. Only real debt I have is a mtg on a rental property. Knowing if the market really goes sour I will still be ok is a good feeling. I owe way less than I bought it for so it is not a bad thing.

commonsense · #10 03-25-2008, 01:35 PM

We refinanced 4 or 5 yrs ago and went for the 15 yrs. If we keep on as we have been it will be paid for when we retire. And that was the goal. Prices haven't dropped much in this area. The midwest didn't have the high , so we don't have the low prices either.