new study by National The mortgage industry has come up
City Corp. looked at home with a number of clever solutions
values for 299 American to this problem by introducing an
cities and compared them to where ever-increasing number of
they "should be" based on a creative loan products. Interest
number of economic factors that only mortgages, where buyers only
determine home prices. The pay interest on the loan, rather
results were not encouraging; than principal, for the first
homes in nearly one third of five years of the loan, and
America were judged to be Option ARM mortgages, with
"extremely overvalued." That's "teaser" interest rates that can
the part that's getting run as low as one percent, have
headlines. A complete read of the allowed people to purchase homes
report shows that things are even they otherwise would not be able
worse, as 100 cities in the U.S. to afford. Neither one of these
have values judged to be too high dangerous loan types contributes
by 18% or more. What does this any money to the actual purchase
mean? price of the home, leaving their
buyers in a precarious position
It will come as no surprise to should prices fail to keep
most people that the areas judged rising. The nationwide increase
to be the most overvalued are in in foreclosure rates suggests
California, Florida, and New York that the market is probably
and Massachusetts. Home prices in peaking.
these states have increased at a
rate that far exceeds the What does this mean for the
increases in salaries in these average buyer? Home prices in the
areas. When homes are priced in a top 100 markets in the U.S. are
way that is disproportionate to overpriced by anywhere between
income, they become unaffordable. 20% and 70%. Prospective buyers
should realize that any home they would have to be considered a
purchase now will probably not risk, since prices are more
appreciate much more in the near likely to fall or stay the same
future, and they should finance in the future than they are to
their purchases with this in rise. Use some common sense when
mind. Buyers should make certain making a purchase, and all will
that they can actually afford the be well.
purchase price and that they can
afford a mortgage that will "©Copyright 2005 by Retro
reduce the principal of the loan Marketing.
over thirty years. A home
purchase with any other terms
About the Author:
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.
Source: www.isnare.com
