[kaycee]

Perhaps my situation is different. My ARM is set to reset in May/June of next year. But buy my calculations, that is only a $300 increase on my $300,000 loan. Granted that is almost a 20% increase, but it is still not 1K a month. Wouldn’t there be an awful lot of people out there like me for whom this will not be a cataclysmic event?

[kaycee]

I agree that most people would never actually pay it off. I think the ability to continually borrow money you’ve already paid down would be too great for a lot of people to resist.

As far as the interest rate though, I may have misunderstood. I thought, like many Heloc’s, it was simply tied to the Libor, and therefore would vary monthly instead of being fixed.

Obviously, right now, there is a lot of upside potential. But historically, the rate would be as likely to tick down some months as it would to tick up others. Am I wrong?

[kaycee]

I think you are all missing the savings from compounding interest. For example; Let’s say that you take out a 100,000 mortgage at 6%. Your payment is $599.95. Here are your first 5 payments:

# Prin Int
1 99.55 500
2 100.05 499.50
3 100.55 499.00
4 101.05 498.50
5 101.56 497.99

If you add just a $100.05 sent principal payment to your 1st payment, you will save 499.50 in interest. Because that $100.05 collects interst for THIRTY YEARS.
If you add just $101.05 to your third payment, you will save another $498.50. Any amount that you can pay off at the beginning of a mortgage, even a small amount, saves you 3 – 4 times that in interest over a 30 year period. So that is how, even having unused money sitting in the account, even for a few days, could save you hundreds when multiplied out over 360 payments.

I have an account where I transfer money every month for my kids’ tuition payments. It is my way of turning a 9 month pymt plan into a 12 month. But the money just sits there a lot of the time, earning a tiny bit of interest that I have to pay tax on. I would rather have it sit in a HELOC and save years of intersest for the few months that the money sat there.

The benefit becomes less though the closer you get to the end of the term.

[kaycee]

I think this is a facinating concept. But I agree with others that the hard part would be not “respending” the equity you’ve already paid down. However, I love the concept on paper. My checking account earns about a 1-2% interest rate. (1.56% last month) On that interest I pay about 33% to Uncle Sam and another 6% to Maryland. (Where I don’t even live, but my husband works). So what is my total take 3/4% ? Maybe? I’d much rather save between 6-7% on that money. But this wouldn’t work unless you are incredibly disciplined.

[kaycee]

I don’t think nail salons will dissapear. High end salons that also do nails will, yes. But those “in/out” shops that do your nails for $6 will thrive. The people who were spending $70 a month on their nails will downgrade. Manicures are like lipsticks. In a recession, lipsitck sales go up because women are cutting back on luxuries but will treat themselves to a >$5 new lipstick. Women will stop coloring their hair but they will treat themselves to a $6 manicure.

Sign spinners must be a west coast thing. I don’t know what they are so I don’t think we have them out here on the east coast.

[kaycee]

They wouldn’t come “after” the buyer. The agent could go after the sellers broker and say that he showed the house, he deserves the commission. HE could then cut out the agent that the buyers actually used to write up the offer. It depends on the rules of the local board. When I was an agent the rules said that the person who originally showed the house got the commission. Then it was later changed to “whomever controlled the buyer”. That is, whover submitted the offer to the sellers agent. Don’t know what it is today. I lost a commission because my buyer had originally stopped into an open house and signed the “guest list’. She later decided to buy that house and I submitted the offer. The sellers agent submitted the signature on the guest list and used it to demand both sides of the commission. Our brokers eventually worked out a deal and I got a part of the commission but not the full one. They changed the rule the following year.

[kaycee]

You can always call the mangaer of that agents office, explain the situation and then ask to be reassigned to another agent in the office. That way, the first agent will still probably get a referral fee if you end up buying that house. But you wont ever have to see him again. You may want to look up the office and see if there is any other agent that you might want to work with based on experience, etc. Then you can have some names to give the manager and you won’t get newbie. Then the manager will run interference and He/She will get the nasty phone call from the original agent. Not you.

[kaycee]

Barnaby,

We are both in the South East. She is in Florida – Miami area. My house is on the water in SC, near Hilton Head. Here the buble is being exacerbated by the Post Katrina/Rita Insurance problem. Apparently insurance companies are not writing new policies. No insurance, no new mortgages, no sales. That plus I think a lot of people, many on this board for example, who are not buying at any price waiting for “the bottom”, “50% off the top” “reversion to mean”, “reversion to 199x or 20xx prices”, etc.

My brother in law moved in February, so they ( he and my s-i-l) have been seperated since then waiting for her condo to sell. How much longer do you wait while supporting two households?

I have no problem selling at whatever the bottom turns out to be. I put more than 20% down and I don’t have a toxic mortgage. I’ve just moved and need to sell my house. I’ll take a hard landing if I can sell my house next month. I guess my problem is I don’t want to undersell my house any more than a buyer wants to overpay. Wouldn’t it be great if we all just knew where the bottom was so we could just move on!

[kaycee]

How can home sales fall 75% from now. They are already at practically zero. At least over here. I’ve given up trying to sell my house, I’ll probably put it up for rent as much as I hate the very thought. I have offered to let my Mother in law move in for free. She may still do that. My sister-in-law decided yesterday to abandon her condo in Florida. She is going to lock the door, turn off the utilities and leave.

At this point I don’t care if the landing is soft or hard. I just want it to land.

[kaycee]

As a current seller, who has seen 4 properties withdraw in my neighborhood in the past 3 days, I have an educated guess. Realtor agreements usually called “Exclusive right to sell”, are generally signed for 90 days. If your house doesn’t sell you may renew it for 90 days. So if you put your house on the market on Feb 1 with a 90 day agreement, renewed it 90 days later on May 1 , renewed it AGAIN on August 1, it has just expired. Now you are depressed, tired of keeping your home clean, and see little hope of it selling over the winter. If you can, at all, you just give up and let your agreement expire. I know I would if I could.

[kaycee]

Thank you all

I will take your advice on all fronts and let you know what happens.

[kaycee]

Yes, VC, I have. And I might do that. I probably would be able to get close to covering my nut. I REALLY don’t want to though. Renting from 600 miles away just isn’t appealing. And what if I get someone who ruins the place? It’s not really a “rental” type property, either. I suppose I would rather make a deal then rent. But you are right, I may not have any other options. You know, I didn’t take out a “toxic” mortgage, I put 20% down. I wasn’t looking to flip. My husband did 13 years in the service and it was finally our time. Time for us to move home and put down roots. I just want to sell my house and move on with my life. I feel like I’m getting dragged down with all the bad apples. Sorry for the rant. It’s just frustrating.

[kaycee]

my only thought is, do you absolutely have to sell?

Well, I’m sort of in the middle. That house was my primary residence for 4 years. And due to a job transfer, I’ve already moved. So the house is empty now. But my new house won’t be ready till Spring so I only have one mortgage, which I can easily afford. I can actually “afford” both mortgages, so I’m not desperate. But I don’t NEED the house so I do want to sell it. I certainly didn’t turn that low ball offer away out of hand. I countered a full 5% lower which I thought was a decent comeback for a 20% below asking offer. They rejected my counter 5 minutes after I faxed it back. They could have come back 50cents more. My problem is, my house is priced 300,000 less than the highest price on my street. Out of the 5 of us, I am lowest priced, and the largest. No one is looking at any of us. I really am willing to make a deal. But with who? Thanks all, for your thoughts on this. Oh, and I am not FSBO”ing. I only tried that for 2 weeks, I’ve had an agent for 6 months. I just bought a 6 month listing on that website. And I figured, any exposure was good!

[kaycee]

I am trying to sell my house. I knew that the bubble pop was coming, but couldn’t get my house on the market until Feb ’06. Exactally the time when my market went flat. (Coastal Carolinas) I’ve put my house on on for 5% less than all the agents who saw it told me too. But it was too late. I’ve now reduced the price 10% but have had almost no interest. I had one offer, for 20% less than my (reduced) asking. I countered, ready to really try to make a deal. But they immediately walked away, clearly they are just bottom fishing. I am the lowest priced house on my street even though I have the most square footage (30% more in some cases). One of my neighbors has RAISED his asking price by nearly 15%. And I’m beginning to wonder if that is the way that I should go. That way when people lowball me by 20%, we’ll be that much closer to a deal. Does anybody have any expericence with that as a tactic?
http://www.fsbo.com/detail_list.phtml?search=2&id=80967&search.x=13&search.y=4

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