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Buyers Contemplate and Seek Out Risky New Mortgages

Buyers Contemplate and Seek Out Risky New Mortgages

As interest rates continue to rise and mortgage availability continues to decline, it is beginning to eerily remind us of something Yogi Berra once said: "It's like deja vu all over again."  For those to have been in the game or to have owned or tried to buy property during the run-up to the 2008 financial crisis which was largely ushered in by the mortgage and real estate industries, it feels like we're all looking in the rear-view mirror waiting to see the red and blue lights.  Because of the rapid and unforgiving rise in interest rates since Q1 of this year, the cost of maintaining a standard 30-year mortgage on a $400,000 home (the current approximate median price in the United States) has risen by about $865 per month since January 1st.  Read that again...the cost has RISEN by $865 per month, that's NOT the cost of paying the mortgage.  The toxic combination of higher prices and rising rates have effectively cut buying power in half for those seeking a mortgage, and that will unfortunately lead to people trying riskier products aa the economy worsens and predictions become more challenging.  The 2008 crisis was brought upon by many types of mortgages which are thankfully in short supply, if available at all, along with more stringent regulations to screen and thereby protect borrowers and reign in predatory lending practices, of which there was a new one every day between 2005-2007.  With rents also skyrocketing and people having been priced out of earlier markets this year and most of 2021, the lure of the risky product with significantly lower payments up front eventually catch up with you.  Before you do this, please be CERTAIN to consult with a trusted Mortgage Lender to review every available option and be sure if you do choose one of these, make sure you understand the full ramifications and timelines associated with it.  This may also be a good time to discuss things that are not commonplace, but less risky approaches, such as a 40-year mortgage.  Once again, we invite you to try pour option of using PropertyGuerilla.com as a resource to locate potential off-market properties, private or pocket listings (which are typically unadvertised as well by rule), or even properties that were not considered for sale, but the Owner is just thinking about the possibilities...you just never know.  The bottom line is to BE CAREFUL, as rates continue to rise Lenders will find ways to enhance mortgages to be more appealing in the short term, but in the end someone always pays.  #realestate #buyingrealestate #sellingrealestate #mortgaeglender #financialcrisis #mortgagetypes #realtor #propertyguerilla   

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