There was an informative article published today by the AP on the ongoing mortgage crisis. The upshot of it was that there are all sorts of factors in play that will likely increase the number of foreclosures and thus decrease home values all over the US. Here is the article.
The basic factors that will likely to create a downward spiral in housing for another year or so include the following:
– People who are “upside down” (owe more than the home is currently worth) can’t refinance with any traditional loans so they might just walk away
– As the economy falters more jobs will be lost and job losses are the primary cause of foreclosures
– A large number of homes purchased at the height of the housing bubble were by investors and investors are much more likely to walk away from an investment property than primary residents are
The upshot is that if you are in an adjustable rate mortgage (ARM), still have equity, and have a credit score of 600+ you should look into a refinance now. The problem with waiting is that if housing values continue to drop you may not have equity any more in six months and will be stuck in an ARM without the ability to refinance into a fixed rate loan. Rates on FHA loans this week were hovering between 6.0-6.5%.
If you are already upside down on your mortgage your best bet to work something out with your current lender. If that isn’t working this new H4H program is slowly getting off the ground so that might work as a last ditch effort as well.