Tuesday, August 15, 2006

Middle Tennessee Real Estate BLOG

Welcome to middle Tennessee's real estate blog! My goal is to post real estate related information for middle Tennesseans. If there's a blog out there for eastern or for western Tennessee, give me a shout and we can co-link.

Let's start with a question that you think doesn't affect you:

Why are foreclosures up? Foreclosures ARE up and that's not a good economic indicator! In my opinion, there's plenty of blame to go around. I know the American dream is home ownership (or winning the Powerball, but let's stick with home ownership for now). But if you can't afford to buy a home, then bide your time. Just deal with living in a rental or an apartment for a little bit longer until you CAN afford it. Otherwise, a predatory lender will find you. I promise they will. And they are not nice. They will pounce on you, roll you in doo-doo, and watch you lose your home to foreclosure later because they didn't do their job right. Here's a link to Predatory Mortgage Lending from the Center for Responsible Lending. They can give you the low-down. May the buyer beware!

To get a home loan, you have to meet certain debt to income standards. Predatory lenders will help you find a way to fudge those numbers a bit. And with more than 1800 different loan products out there, they will find you something (declared income loan, for example). Of course that something may mean an interest rate one to four to eight points higher. The higher your interest, the more your monthly mortgage payment.

And if a lender finds you a loan with a LOW, but variable rate, you may think you're rockin' and rollin'. And you may be for a year or so. But after that golden period, that variable rate may start creeping up. We aren't talking a rate that would mean cutting that once-a-month-out pizza meal either. Just a little here and a little there may mean an extra $200 each month that you suddenly have to find. And when people can't afford to pay that, they get behind.

When people get behind, the snarling dogs come in and begin circling you. If you can't find the money and fix it, or refinance into a locked-in rate... welcome to foreclosure.

What happens to your credit score when you have a foreclosure? Stay tuned!


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