HousingWire, the excellent blog on the mortgage industry, summarizes nicely the report on mortgage application activity put out weekly by the Mortgage Bankers’ Association ( mbaa.org). Refinance and purchase transactions dipped last week; with most speculating that the fear stoked by the media in light of the problems at New Century and Fremont (along with 40 others). Just like "irrational exuberance" "irrational fear" can be a bad thing.
Ã¢??There is plenty of fear in the marketplace right now, especially among buyers,Ã¢?? said one industry source, quoted under HWÃ¢??s customary policy of anonymity. Ã¢??Major media outlets have been stoking the fire, probably generating too much heat at this point. I donÃ¢??t know that right now is a horrible time to refinance in particular, in spite of subprime troubles, especially for prime borrowers.Ã¢??
The problem with this is that there are many people who are trapped in an adjusting mortgage (more than $1.5 trillion worth of mortgages are set to adjust in 2007) who should not be paralyzed by fear. They should realize that they need to protect themselves against payment shock and actively begin the search for a mortgage that fits their particular situation. Being paralyzed right now can be catastrophic for people in adjustable rate mortgages.
1. If you are a borrower in an adjustable rate mortgage; figure out your options. Whether you do anything or not is irrelevant. Know what you are facing if you do go adjustable, and learn what you can do now to save yourself money.
2. If you are a mortgage professional it is incumbent upon you to inform your clients in 2/28 and 3/27 type loans about the pending adjustment and provide them SOUND options. Key word being sound.Click to See the Latest Mortgage Rates»