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Section 8 Housing The Section 8 program makes housing affordable for voters by shifting costs to taxpayers. The Best Time to Invest in Dominican Republic Real Estate This article is about the future outlook for the Dominican Republic Real Estate market and the impact of the recent economic slow down in the US The {pros and cons\|benefits and drawbacks\|advantages and disadvantages\|positives and negatives\|pluses and minuses} of {interest only\|interest-only} {mortgage deals\|mortgages} An unbiased guide to helping you find the best mortgage. This articles shows you the pros and cons of picking an interest only mortgage. Bangkok Apartments Property Bangkok has one of the largest selections of apartments, condos, houses and commerical properties in Thailand. We also offer free advice when choosing your new home. Section 8 Houses for Rent The Section 8 program also called the Housing Choice Voucher Program is a federal aid initiative developed by the United States Department of Housing and Urban Development (that provides housing assistance to extremely low income individuals, families, senior citizens, and individuals with disabilities). Basic Commercial Mortgage Options Small business finance options for small business owners have changed and reviewing commercial real estate financing basics will help business borrowers when facing commercial banking problems. Learning the New Basics for Working Capital Management Business finance options for small businesses have changed recently and the process of reviewing working capital management basics will help business borrowers when faced with potential commercial lending problems. Is Renter's Insurance Worth Buying? If you are living in a rented accommodation, you do need to consider renter's insurance. Although your landlord will have to provide... How To Find Management Rights Opportunities In Cairns Queensland Living in Cairns Queensland is a dream come true for people that want to live a very fulfilling and somewhat off beat laid back lifestyle. Purchasing management rights is quite possibly the best way to make that dream become a reality. Five Innovations in Green Flooring As the name implies, green flooring is an ecologically friendly alternative to traditional synthetic flooring methods. It is focused on using organic and easily renewable materials, eliminating negative... How to Succeed in Real Estate Lead Generation When one talks about real estate as a business, it is unavoidable to think about how highly competitive the industry is. Since economic situations are dynamic and rapidly change... Useful Tips For Successful Real Estate Lead Generation The real estate industry is often considered as volatile, such that trends can change immensely, influencing either positive or negative outcomes, and overall affecting the state of... Is Downtown Condo the Place for You? Since many years there has been a rise in the number of purchasers buying Grand Rapids downtown condos Top 5 Mistakes of a Lowball Offer on a Home Buyers make five common mistakes when submitting a lowball offer on a home. The article deals with these mistakes. Through research and having a great real estate agent, can help buyers avoid these mistakes when making a lowball offer on a property. In todays market should I buy a home? With all the talk today, is home buying still a good investment? Some information on buying a foreclosed home? Is buying a foreclosed home a good investment? Ann Arbor Open Houses information available at Ann Arbor Open Houses dot Org As a real estate buyer's brokerage our objective is to â€œsave you money and protect your interestsâ€. Common Mistakes of Ann Arbor real estate buyers Not obtaining "preapproval" from a lender before starting the search for your new home. Choosing The Best Realtor In today's turbulent real estate market, it has never been more important to select the realtor that will best represent the interests of the client. Littleton Mortgage : How to pick a house There are many options in buying a home. The possibility are endless and the buying process is very dynamic. Denver Home Mortgage : Renting Information If you are going to stay put in the same location for less than two years, then you should not be committing yourself to a home purchase given Understanding What 1031 NNN Triple Net Leased Investment Properties Are When looking for investment properties, you may have come across something called 1031 NNN triple-net leases and passed them by, not understanding what they are. Homes Forever Homes are built after years of struggling and saving, hard work and perspiration. The effort involved is phenomenal and it becomes a place and possession that is treasured and cherished. The Participation of Women in the Housing Bubble One of the unique characteristics of the Great Housing Bubble was the large increase in market participation among women, sometimes single women and sometimes as married women buying property on their own. The High-End Suburbs Will Also Crash The course of a financial market, particularly the real estate market, is a long and winding road full of twists and turns and unexpected outcomes. It was certainly foreseeable that banks and builders might fail and the GSEs might need to be bailed out, but the how and when of these occurrences are always unpredictable and newsworthy. Does Home Appreciation Make It Easier to Move Up? The conventional wisdom in California real estate is that you buy a home, and when it appreciates, you sell it and move up to a better home. There is some truth to this idea, but not in the way most people think. Take Advantage of a Buyer's Market When the market turned up in the late 1990s the market shifted. During the last decline, the buyers had an advantage. During the bubble the advantage went to the sellers. The seller's market went on for so long and became so feverish that people have forgotten (or may never have known) what it was like to see buyers in control of the action. What Happens in a Foreclosure? Foreclosure is the forced sale of a property owned by the borrower in order to satisfy the debt(s) secured by the property. Foreclosure laws are complex, and they vary from state to state. There are no federal laws governing foreclosures. The borrower is the legal owner of the property who has entered into a mortgage agreement with a lender to pay back all borrowed money, fees and interest due. How Does a Decrease in Home Ownership Rates Impact Residential Real Estate Markets? There is a strong correspondence to the growth of the subprime lending industry and an increase in home ownership rates. This is a direct result of lending money to those borrowers previously excluded from the housing market either because the borrower did not have the downpayment, or they lacked good credit. The collapse of the subprime lending industry in 2007 and the subsequent foreclosures on the millions of subprime loans caused a decrease in home ownership rates. Only a Fool Believes Real Estate Prices Always Go Up In 2007 and 2008, house prices declined nationally for the first time since the Great Depression. From 2002 to 2006, there was a massive Ponzi Scheme of ever-increasing debt that fueled the Great Housing Bubble. People bought in to this Ponzi Scheme because they believed real estate prices always go up. They were encouraged in this belief by the National Association of Realtors. Foreclosure Attorney Miami Foreclosure is the legal method through which the banks or debtors will sell the property of the property owner, in order to collect the debt Factors that Influence the Price Declines in Residential Real Estate Markets There are a number of factors that will influence the timing and the depth of the price decline. There are a number of psychological factors and technical factors in play. Housing Market Speculation Was a Disaster Many people decided to speculate in residential real estate markets during the Great Housing Bubble. Most were amateurs that had no idea what they were buying or why prices were increasing. The only thing they did know is that prices were going up, and they believed they would continue to do so forever. 5 Tips on receiving a Good bargain on a Home Loan Generally Mortgage Brokers often have better amounts of mortgage products and enticing mortgage rates that they can deal, compared to your local bank however in some situations they often charge extra fees to the borrower. Advice and the Pros and Cons Between A Fixed Rate or An Adjustable Rate Home Loan In the most simple terms, the contrast between a Fixed Rate Mortgage and an Adjustable Rate Mortgage. Did Lenders Cause Their Own Credit Crunch? It seems lenders forget basic facts about lending every so often and create a new financial bubble. Perhaps they succumb to the pressure of the investment community or their own shareholders, or perhaps they just start believing their own "innovation" marketing pitch and forget the basics of sound lending practices. Selling Your Investment Home in a Slow Market using Flat Fee MLS If the Chicago market is slow, you can yet retail your property if you make your listings and signs professional and attractive. Make sure that your flyer is intriguing and well put together as well. Even when the housing is market is slow, you can still be selling your investment property quickly, if you follow a few basic steps... When Your Ready To Purchase All across the United States, there are thousandsof consumers looking to a lease condo - either immediately or in the upcoming days. Through the last few years, reduced percentagerates have come along, making it more inexpensive than ever to lease a condo. Everyone Wants To Live Here... Not! The Great Housing Bubble witnessed many foolish ideas and beliefs about real estate. Among the most foolish was the idea that prices went up because everyone wants to live wherever they are. When rational arguments fail to explain something, it is only natural that people will start making things up. Have California House Prices Always Been Crazy? Volatility in real estate prices is not new to California. During the 1970s, real estate prices detached from typical valuations of three-times yearly income seen in the rest of the country. Once residents realized they could push up prices in their real estate markets to dizzying heights, they have been doing it ever since. Greed springs eternal. What is the Option ARM Payment Rate? A negative amortization loan is any loan where the monthly payment does not cover the monthly interest expense. Interest-only or conventionally amortizing loans do not have this feature, and the monthly payments are based on the interest rate charged and/or the duration of the amortization schedule. Since the negative amortization loan breaks down this traditional relationship, there is a completely separate rate calculated for the minimum payment amount. Do You Understand the Three Types Of Loans - Conventional, Interest-Only, and Negative Amortization? There are 3 main categories of loans: Conventional, Interest-Only, and Negative Amortization. The distinction between these loans is how the amount of principal is impacted by monthly payments. Conventional loans pay off the debt, interest only loans neither increases or decreases the debt, and negative amortization loans add to the debt. Where Is The Epicenter Of The Housing Bubble? The epicenter of the Great Housing Bubble is located in Irvine, California. One of the primary causes of the bubble was the lowering of lending standards and the extension of credit to people who could not handle the responsibility: Subprime borrowers. The word "subprime" has become indelibly linked to the Great Housing Bubble. It is one of the causal factors that make the bubble unique, and the collapse of subprime is widely regarded as the pin-prick which began the bubble's deflation. Moving Overseas Moving overseas is a small adventure; the more prepared you are the more you will be able to enjoy the new circumstances of your life. Fifteen Common Lies Realtors Tell Realtors are agents of sellers. It is their job to obtain the highest possible sale price for a piece of real estate. The most common ploy realtors use it to attempt to create a sense of urgency in a buyer. In a seller's market, prices are rising, and buyers already feel a sense of urgency. In a buyer's market, prices are falling, and there is no urgency on the part of buyers. This fact does not stop realtors from trying to create urgency even if the truth is cast asunder. People Will Not Want Mortgage Debt in the Future The next big psychological change to impact housing will be a change in homebuyer's relationship with debt. When prices were going up, and nobody thought they were going to have to pay the debt off themselves, people borrowed all they could. Once prices stopped going up, and people were faced with paying off these enormous debts, the appetite for borrowing cooled significantly. If You Are Underwater but Can Afford the Mortgage Payment You Should Hang On Anyone that can manage their payments should consider trying to hold on, even if the house value has dropped well below their purchase price. There are still a great many overextended homeowners and speculators who cannot possibly manage their payments, and for them trying to hold on until the market comes back is a foolish waste of time and resources. The market is not going to come back before they go under. However, for those who can make the payments, there emotional benefit of home ... The One Stop Mortgage and Home Loan Solutions Murfreesboro, Brentwood, Clarksville and all of Tennessee and Nashville home loan mortgage solutions and secrets have finally been unveiled in a radically designed website; an educational, informative and inspirational site, www.yourmoneysource.net is fully equipped with Nashville home loans and mortgage related info, loads of free reports, a home buying guide and free mortgage calculators. Specifically designed to enlighten the site visitors, YourMoneySource.net reveals all facts and figures ... The Key to Housing Affordability Is Not Mortgage Finance The difficult problem with affordable housing is how to provide it without making it unaffordable. Finance is not the answer. We all want affordable housing. There are numerous government programs designed to provide low-cost rental and ownership properties to people in all walks of life. Lenders, builders, realtors and buyers all benefit from affordable housing because affordability means an increase in transaction volumes and more money into the pockets of those dependant on the real estate ... Regulating the National Association of Realtors Would Help Prevent the Next Housing Bubble The sales tactics of the National Association of Realtors should be examined and potentially come under the same restrictions as securities brokers through the Securities and Exchange Commission. Realtors routinely lie about the investment potential of residential real estate. People believe these lies and enter into transactions that often harm them financially. Regulating Loan Amounts Would Help Prevent the Next Housing Bubble The parameters of the forming limitations on the debt-to-income ratio and combined-loan-to-value are essential to prevent bubbles in the housing market and to prevent the banking system from becoming imperiled in the future. Loan amounts much be tethered to incomes and limited by existing property values. Without these limits, prices can take flight with lender capital. During the crash, lenders saw values drop below their loan amounts, and they lost a great deal of money. Strict Loan Documentation Standards Will Help Prevent the Next Housing Bubble One of the most egregious practices of the Great Housing Bubble was the fabrication of income by borrowers that was facilitated and promoted by originating lenders. Stated-income loan programs were widespread, and they were the cause of much of the uncertainty in the secondary mortgage market during the initial stages of the credit crunch in the deflation of the bubble. Basically, investors had no idea if the borrowers to whom they had lent billions of dollars were capable of paying them back. Regulatory Solutions to Prevent the Next Housing Bubble The regulatory solution proposed herein is simple, yet far reaching. It comes in two parts, the first is to limit the amount lenders can loan to borrowers with a rather unique enforcement mechanism, and the second is to increase the penalties for borrowers who commit mortgage fraud. The following is not in legalese, but it contains the conceptual framework of potential legislation that could be enacted on the state and/or federal level. Changing Appraisal Methods would Prevent the Next Housing Bubble Investor confidence in the market for CDOs and all mortgages was shaken during the decline of the Great Housing Bubble, and rightly so. Investors were losing huge sums, and nobody clearly understood why. There was a widespread belief these losses were caused by some outside factor rather than a systemic problem enabled by the lenders and investors themselves. Know Your Rights - Info For Renters, Patients, And Employees It is important to know what your rights are and what to do if they are violated. Recourse and Non-Recourse Loans - What Is the Difference? When a borrower cannot repay a loan, the lender may or may not be able to sue the borrower to collect any shortfall. The key difference is whether or not the loan is classified as a recourse loan or a non-recourse loan. Distressed Sellers - Should They Attempt a Short Sale? A short sale is a property closing where the proceeds from the closing do not satisfy the outstanding debt on the property. The lender must agree to accept less money at the closing table for the closing to occur. From a credit perspective, there is little or no difference between a short sale and a foreclosure. Both a short sale and a foreclosure will show a series of missed payments and a secured credit line (or multiple credit lines) with a permanent delinquency and discharge for what is ... The Down Payment A down payment is money that the buyer must pay up front to buy a home. When a person takes out a mortgage the lender or bank in almost all cases will require that the person borrowing the money make a down payment. Future Loan Terms and Residential Real Estate Markets One of the primary mechanisms for inflating the Great Housing Bubble was the widespread use of exotic loan terms including interest-only and negative-amortization adjustable rate mortgages. The appeal of interest-only and negative-amortization loans is the lower payments they offer, or their ability to finance larger sums of money with the same payment. These loan terms are unstable, and they may not be offered to future buyers. If these loan programs were eliminated, the financing sums would ... Housing Bubble Credit Expansion - Credit Inflated the Housing Bubble The Great Housing Bubble was inflated by a massive expansion of credit and the influx of capital into residential mortgages. The expansion of credit took four forms: lower interest rates, lowering or eliminating qualification requirements, different amortization methods, and higher allowable debt-to-income ratios. How to Decide if an adjustable rate mortgage is Right for You An adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. Understanding The Popularity Of Real Estate In Collingwood, Ontario If you have been reading real estate news lately, you're probably wondering why there's so much fuss about property in the Collingwood area of Ontario and why the buzz these days is about how buying or renting property there is such a great idea. It Is Different This Time... Not! Each time the general public creates an asset bubble, they believe the rally in prices is justifiable by fundamentals. When proven methods of valuation demonstrate otherwise, people invent new ones with the caveat, "it is different this time." It never is. Buy Now or Be Priced Out Forever... Not! When prices rise faster than their wages, people can obtain less real estate with their income. The natural fear under these circumstances is to buy whatever is available before there is nothing desirable available in a particular price range. This fear of being priced out causes even more buying which drives prices higher. It becomes a self-fulfilling prophecy. Mortgage Equity Withdrawal - Are Americans Addicted to It? Much of the money homeowners borrowed fueled consumer spending and reinforced poor financial management techniques. It was common during the bubble rally for people to run up enormous credit card bills then refinance every year and pay them off. It is foolish enough to finance consumer spending, but it is even more foolish to pay for this spending over the 30-year term of a typical mortgage. The consumptive value fades quickly, but the debt endures for a very long time. Judicial and Non-Judicial Foreclosure - What Is the Difference? When a borrower cannot repay a loan, the lender may or may not be able to sue the borrower to collect any shortfall. The key difference is whether or not the loan is classified as a recourse loan or a non-recourse loan. If the loan is recourse, meaning the lender can go after any shortfall, the lender still must go through a judicial foreclosure in order to collect the deficiency. Home Improvements Loans Are a Bad Idea Most homeowners do not save money for major improvements and required maintenance, and these homeowners often take out home equity lines of credit as a method of mortgage equity withdrawal to fund home improvement projects. The logic here is that renovations improve the property so an increase in property value offsets the additional debt. This is a bad idea. Mortgage Equity Withdrawal is a Cultural Pathology Mortgage Equity Withdrawal or MEW is the process of obtaining cash through refinancing residential real estate using the accumulated equity as collateral for the loan. This is a cultural pathology because it is not sustainable. Many people became addicted to using their houses as an ATM machine, and when prices fell, these people lost their homes in foreclosure. They Aren't Making Any More Land... Not! All market pricing is a function of supply and demand. One of the reasons many house price bubbles get started is due to a temporary shortage of housing units. This is a particular problem in California because the entitlement process is slow and cumbersome. Supply shortages can become acute, and prices can rise very quickly. This does not mean land is scarce. It means that the supply of dwelling units is experiencing a temporary shortage. It may seem like a minor distinction, but it is very ... Inflation and Home Equity - What Is the Relationship? House prices historically have outpaced inflation by 0.7% nationally. In a normal market, this is the only appreciation homeowners obtain. This appreciation is caused by wage inflation translating into higher housing payments and the ability of borrowers to obtain larger loan amounts to bid up prices. In some areas where wage growth has outpaced the general rate of inflation, the fundamental valuation of houses has increased faster than inflation. What is International Investment estate? World broad estate investment is also known as International Investment estate. The idea is to invest on valid estate or estate overseas such as leave houses and condos, or even manor. Buying French Property: The ‘In’ Thing Today Looking for a suitable house or a villa in France is no longer difficult as there are approximately 200,000 properties that are for sale in the country. However, many people feel that purchasing any French property is not hassle-free as it involves a lot of paperwork, considering that the French are very fascinated with contracts. True, the French likes a lot of paperwork, not to make purchasing difficult and inconvenient, but to protect the interest of those who purchase the property. Tips on buying French Property The best of French estate is just a click away! If one wants to buy a house in France as escape house or one's new home, France is the faultless place. How To Easily Find Foreclosure Listings Finding foreclosure listings is the most important aspect of investing in foreclosed property. To understand how to locate foreclosure listings, you must first understand that there are several ways that property foreclosure listings can be found. Downpayments Are Back! What Happened to 100% Financing? Downpayments are required again thanks to the credit crunch. Many people thought 100% financing would be made available forever. They were mistaken. One-hundred percent financing will never return because it exposes lenders to too much risk. Stated-Income Loans - How Common Were They? One unique phenomenon of the Great Housing Bubble was the utilization of stated-income loans, also known as "liar loans" because most people were not truthful when stating their income. When house prices were going up, greed motivated many people to buy homes to capture appreciation. Actually having the income to qualify for a loan was a limitation to participating in the financial mania. Stated-income loan programs eliminated this barrier and allowed people to borrow as much as they wanted ... The Home Mortgage Interest Deduction is Widely Overestimated and Misunderstood Debt subsidies, in particular the home mortgage interest deduction, are seen as a great benefit to home ownership. The benefit is widely overestimated and misunderstood. Lies Realtors Tell - Ten of Their Favorites Realtors are agents of sellers. It is their job to obtain the highest possible sale price for a piece of real estate. By law they cannot misrepresent any facts about the property, but when it comes to opinions about the investment potential of the property, or the state of the real estate market, Realtors can say whatever they want. There is currently no restriction on the exaggerations or outright lies realtors are allowed to tell regarding residential real estate market performance. Pick-a-Pay Option ARM Loans - What Are They? The Negative Amortization mortgage (aka, Option ARM or Neg Am) is the riskiest loan imaginable. It has all the risks of an interest-only, adjustable-rate mortgage, but with the added risk of an increasing loan balance. Using this loan, there is the risk of not being able to make the payment at reset, and the borrower is much more at risk of being denied for refinancing because the loan balance can easily exceed the house value. In either case, the home will fall into foreclosure. The Interest-Only, Adjustable-Rate Mortgage is Very Risky The interest-only, adjustable-rate mortgage (IO ARM) became popular early in the Great Housing Bubble. When fixed-rate mortgage payments were too large for buyers to afford, they turned to IO ARMs as an affordability product. Unfortunately, these mortgage products are not stable because at some point, payments increase, and the borrowers often default. Conventional 30-Year Amortizing Mortgage - Why use It? A fixed-rate conventionally-amortized mortgage is the least risky kind of mortgage obligation. If borrowers can make their payment, a payment that will not change over time, they can keep their home. At the end of a predefined term, the original funds have been paid in full, and the loan is discharged. Foreclosure Investing - How To Make Money By Investing In Foreclosed Homes Foreclosure investing is an excellent way to see a huge return on your money. In times when the economy is slow, or the housing market has lapsed, great deals abound, making the environment perfect for foreclosure investing. Renting Versus Owning Residential Real Estate Renting versus owning is both an intellectual, financial decision and an emotional decision. The financial decision is first and foremost an analysis of the comparative cost of renting versus owning. It makes no sense to pay more than rental equivalence to own residential real estate. Many people still do because they are chasing the fantasy of endless appreciation and real estate wealth, but most of these people will find the increased cost of ownership over time negates any appreciation ... A Few Tips For Getting Started In Real Estate Investing Real estate has long been considered as one of the better investments available. Exotic Loan Programs Always Fail Over the last 60 years since World War II ended, a number of experimental loan programs have been attempted. These include interest-only loans, adjustable rate loans, and negative amortization loans among others. It is this group of loans that has consistently failed in the past for one simple reason: if payments can adjust higher, people will default. High default rates doom mortgage programs because these high default rates will eventually cause large default losses for the holders of these ... 10 Reasons Why You Should Invest in Costa Rica Real Estate I have been living in Costa Rica for 3 years now. Here is 10 reasons for you to invest in properties in Costa Rica. Adjustable Rate Mortgage Payment Recast - What is It? Interest-only and negative amortization payments cannot go on forever. At some point, the loan balance must be paid in full. For all adjustable rate mortgages, there is a mandatory recast after a fixed period of time where the loan reverts to a conventionally amortizing loan to be paid over the remaining portion of a 30 year term. Housing Bubble - Why Should Anyone Care? Why should anyone care about financial bubbles in general and the housing bubble in particular? The first and most obvious reason is that the financial fallout is stressful. Many people lost a great deal of money. Beyond that, the housing bubble had enormous impact on the health of individuals, families and entire communities. Real Estate Bubble Fallacies - Can You Identify Them? There are a number of fallacies about residential real estate that either affirm the belief in perpetually rising prices or minimize the fears of a price decline. These fallacies generally revolve around a perceived shortage of housing or a belief that the higher prices are justified by current or future economic conditions. These misperceptions are not the core mechanism of an asset price bubble, but they serve to affirm the core beliefs and perpetuate the price rally. Bring Back Paternalism in the Mortgage Market As a society, we have created a system that strongly encourages a borrow-and-spend mentality. Saving in all its forms are punished while borrowing is strongly subsidized and encouraged. The credit orgy of the 00s saw this system taken to its ultimate extreme. The result was a vicious credit crunch, a collapse in asset values, and an economic downturn second in severity only to the Great Depression. Obviously, something needs to change. A little paternalism in the mortgage market is one of a ... Subprime Containment Theory Was a Lie Conventional wisdom (or market spin) was that the risk of default from subprime would not spill over into Alt-A and Prime loans. This argument was made because these two categories have historically had low default rates. Of course, this argument ignored the "liar loans" taken out by those with higher credit scores, the unmanageable debt-to-income ratios, and payment resets for interest-only and Option ARM loans which were also given to the Alt-A and Prime crowd. Historically, this group had ... Home Equity - What is It? Many people who purchase real estate have no idea what equity is, what creates it, what destroys it, and what to do with it. People who purchase real estate use the phrase "building equity" to describe the overall increase in equity over time. However, it is important to look at the factors which either create or destroy equity to see how market conditions and financing terms impact this all-important feature of real estate. Unaffordable House Prices, Will It Last Forever? During the Great Housing Bubble, prices detached from their fundamental valuations and became very inflated. This price inflation created a situation where affordability dropped to record low levels in many real estate markets. The fear of buyers was that failure to purchase a property would mean they would never be able to own because they would be priced out forever. For this fear to be realized, prices much sustain inflated levels of low affordability forever. Is this possible? Interest Rate Resets on an Adjustable Rate Mortgages Are a Problem Many people took out adjustable rate mortgages during the Great Housing Bubble. After 25 years of steadily declining interest rates, people forgot about, or never knew about the risk of rising interest rates and what it would do to their housing payments. Adjustable rate mortgages are great while interest rates are declining. Their payments are lower than fixed rate mortgages, and as interest rates decline, they become an even better deal. However, when interest rates go up again, these loans ... Real Estate Investment versus Real Estate Speculation - What is the Difference? Owner-occupied residential real estate is viewed by many people as a good investment. Realtors often use this idea as part of their sales pitch. This view is fallacious and it is one of the beliefs responsible for creating an asset price bubble. To understand why houses are not a great investment in most circumstances, one needs to understand the difference between investment and speculation. Low Mortgage Interest Rates, It Is a Bad Time to Buy A House The fluctuation in mortgage interest rates has implications for when it the best time to buy and the best time to refinance a home mortgage. It is a popular misconception that low interest rates make for a good buying opportunity. It is not. Buy when interest rates are high, and refinance when interest rates are low. Real Estate Only Goes Up... Not! The mantra of the National Association of Realtors is "real estate only goes up." This economic fallacy fosters the belief in future price increases and the limited risk of buying real estate. In 2006, prices in many markets began to fall. By 2008, the rate of price decline had greatly accelerated. This is dramatic proof that real estate does not always go up. Despite this obvious fact, the National Association of Realtors still tries to lure greedy buyers with fantasies of unlimited wealth in ... Higher Interest Rates and Residential Real Estate Markets - What Would Happen? A key factor impacting the fundamental value of housing and thereby the bottom is interest rates. Higher interest rates would devastate residential real estate markets. When interest rates go up, the amounts borrowed go down assuming a consistent payment. As amounts borrowed go down, so do real estate prices. Debt-to-Income Ratios Impact on Residential Real Estate Markets The debt-to-income ratio is a measure of how far buyers are "stretching" to buy real estate. Buyers have historically committed larger sums to purchase real estate when prices are rising in order to capture the appreciation of rising prices. Conversely, buyers have historically committed smaller and smaller percentages of their income toward buying real estate when prices are declining because there is little incentive to overpay. Some may look at this phenomenon as a passive effect of the rise ... Hyperinflation and the Housing Market The Federal Reserve under Ben Bernanke began aggressively lowering interest rates at the end of 2007 in response to the severe economic downturn caused by the collapse of house prices and the related difficulties falling house prices had on the banks and other institutions that made loans using houses as collateral. Many are concerned that these policies will ignite a period of hyperinflation in the United States.
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