These Times They Are a-Changing...

How many of you have felt the crunch of the banks the past few months? I certainly have. And in a not so fun way.

I have been working on a short sale for four months now and the first lender is Indy Mac. If you watch the stock market you can roll your eyes along with me at the thought of what is happening to our economy. The interesting thing is that we have been waiting and waiting for word from the bank or anything just to let us know that we still exist and on the day the announcement was made that the FDIC is in control of Indy Mac (Indy Mac is in receivership) the listing agent actually got a phone call from Indy Mac! The phone call was initiated from their end!

Everybody is asking me what does this all mean? The answer is, I don't know. I'm hoping that Indy Mac will see that they need to get some money in pretty quickly so they will start getting their bodies in gear and accepting these offers that have been sitting on the table for months. If I was a manager there I would tell my people to bring in the money.

So, with my amateur prognosis, I am hoping that soon Indy Mac will accept our offer and push us into escrow to close this deal. Unfortunately it seems that it is too late to save Indy Mac. I drive by the headquarters of Indy Mac every day on my way to the office in Pasadena. It is not a happy day when we see our banks folding like chairs. But, if you want to know what is going on you can visit the site www.lenderimplode.com and I'm not promising you will feel any better, you may have to turn away at times, but it's the bare reality of what is happening. I believe it says 266 banks have 'imploded.'

In my company at Prudential we have an in-house lender who is an expert in the financial field. I defer my judgement to him and trust that we will all get through these strange times...because folks, these times, they are a-changing...

Good Luck out there!

Prices Falling and Interest Rates Climbing...

Hello Friends,

I've heard from many of my buyers that they are going to wait for prices to hit rock bottom. They think they don't need to hurry and buy now because we have not reached the lowest prices of the year. Well, my friends, the time is now!

From my experience and my relationship with our in-house lender I am aware of the upward trend in interest rates. Although they may be lower on Monday, higher Wednesday then back down on Thursday, the overall trend is UPWARD. I have clients who locked in their rates a few months ago at 5.62%. Those rates have expired and are now over 6%.

Let's see what happens if you are looking at a house where your payments will be approximately $4000 per month. Let's say that you can get a 6.15% interest rate today. But you decide to wait because you think this house will come down in price. Sure enough, the price of the house drops $20,000 next month, but your interest rate has increased a half percent. How does this affect your overall monthly payment?

Unless you are paying all cash for your home, you are really purchasing a mortgage which means, you are purchasing a monthly payment. If your interest rate increases 1% you will be paying a monthly payment of about 15-20% higher. A half a percent will be around 8-10% higher. In the long run you will end up paying more for your house if you wait for prices to fall as interest rates continually rise.

This is something to think about if you are ready to buy. Don't wait. This is the year to buy and if you wait too long you may just be missing the boat which I think is leaving the harbor now. Get in now and be happy that you did!