Mortgage Lender to Answer Questions that You May Have

[X1Y2Z3]

Daniel,

A good place to look for mortgage data, historical numbers and index information is HSH.com if I remember it correctly. You should be able to pull up the 10 year data and the 30 year fixed data and do a graph in Excel to get your answer.

[X1Y2Z3]

VCJIM,

I believe you are correct that the Fed is stuck between a rock and a hard place. They left rates alone today, that was because the economy is slowing and housing is falling. But, they are supposed to be fighting inflation and inflation is very much a problem now. My guess is that the Fed will be weak, and will ignore inflation, they will talk a mean game but won’t do anything about it, to keep the economy afloat. The problem is the US econnomy is based on debt and if rates get to high, it would be a disaster. Its called a liquidity trap, rates have been too low for too long and people have taken on too much debt. The same thing has happened in the UK. Their central bank raised their rate by .25% and people are crying because they can’t pay their debts. The next problem is that the Fed already cut the funds rate to 1% in 2003 or so. If they cut rates again, it will not have the same impact, because people are already so indebted, that is why you are seeing 40 year adn 50 year mortgages coming out. People can’t continue servicing their debt. I believe in Japan, at the height of their RE bubble they came out with 100 year mortgages. Well their RE market has been down more than 50% for 10 + years. And their central bank cut rates to 0% plus they went even further by printing money to buy 10 year bonds to drive down long term rates. But, everyone was so indebted that the increase in liquidity by their central bank did not stop the housing market from crashing. Also, their stock market is still down 70% from 1989. It peaked at 40k in 1989 or so and is at 16k or so now. Their psychology changed and people refused to buy even with 0% interest rates. When prices are falling, especially if they are falling fast, do you buy today, or wait a day to buy for a cheaper price. This becomes a vicious circle, the exact opposite of the foolishness we saw the past couple of years where people felt that if they didn’t but today the price would be higher tomorrow.

[VCJIM]

X1Y2Z3,

Thank you for participating, you are a real asset to the forum.

As to the feds holding the rate today, watch the dollar fall….

[powayseller]

I agree, you are a real asset. Can you share any insights on the financial situation of the typical San Diegan, if there is such a thing?

Regarding the idea that certain people can afford adjusting ARMs because they are in entry level jobs with rapid advancement in pay: isn’t that true for some people? What percentage? Or do most graduates carry debt now?

What types of loans do rich people take out? How would you know if someone cheated on their stated income application, or does it matter if you know?

What role did appraisers play in all this? I know there are good ones, like Bugs and Steve Beebo, but did you see any appraisal fraud?

Do you know of mortgage officers who upped the applicant’s income, just to make the loan work?

[Anonymous]

“do most graduates carry debt now?”

Well, I do not know about all graduates, but my wife (doctorate in 2 years) and I (MBA in 2 years) will have spent $250k on our educations. We leave school with $130k of student loans. Therefore, if not all graduates, my wife and I will carry debt.

We just sold or one bed and one bath condominium in Orange, CA in April and was able to pocket $100k.

I have a question, what should I do with the extra money? I have been reading and I am leaning towards keeping it for a down payment vs. paying off student loans? What does the Piggington crew think? All comments are welcome.

[Anonymous]

I’ve lived in the Irvine area for over 30 years and as a mortgage/real estate professional I’ve seen the boom times and the busts. I agree with many readers that time is on your side now.

If your heart is set on Woodbury or Portolo Springs, imagine the builder incentives you might get after a few years of slack demand. Or consider the deals that desperate resales might offer over this same period.

Parking your family into one of the new resort style apartments for a few years is not a bad way to wait out the storm. Your patience could be greatly rewarded.

[ocrenter]

a doctor may be able to ride the ARM reset by jumping from residency to his/her regular job. that is likely to have very little effect because there are no doctors buying, not for the last 2 years. The only medical professionals buying properties in the last 2 years are the medical assistants and the radiology techs. (ok, slight exaggeration, but you guys get my point)

x1y2z3, thank you for your informative posts, what an addition to this board! I have a question. my landlord was on the verge of getting his NOD, now he claims he’ll be able to refi out of his troubles. problem is he purchased 4 homes in the last year, all 4 are cash flow negative, 100% financed, and now all have negative equality. I know you said anybody that can fog up a mirror can get a loan, but even a guy like my landlord can still get refi?

[ocrenter]

irvinesinglemom, we moved away from irvine/OC precisely because we didn’t want to wait. running my blog and doing my due diligence, my feeling is OC will crash, but it’ll take some time. if you want to stay in irvine, be prepared to wait for a long time, ie. 3-4 more years before being able to buy. go to my blog, check that Escondido post, that will happen everywhere, including OC. And go to the inventory numbers, see how SD has 23,000 resale homes to OC’s 17,000 with the same population size. others will disagree with me, but I really feel you are looking at 1-2 years behind SD with OC. $100,000 is not a lot of money, don’t jump in.

[ocrenter]

here’s my blog: Bubble Markets Inventory Tracking

[Author]

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