Time to Refinance or Buy in Lake Tahoe

Author:	Lucas Jones
Source:	Homes Discovered
Date:	July 10, 2006

New times are ahead for those in the Lake Tahoe real estate market or for those who want to break into real estate for the first time.  Many people who opted for creative mortgages during last years housing mania may want to reconsider what is at stake if rates go up or home values go down.  The housing boom has forced many people to use any financial leverage that they could to buy a home such as risky ARM's with low initial-cost benefits, interest-only payments, option-payment, and piggy-back loan terms.  Any number of factors could contribute to a high rise in the number of people seeking mortgage counseling in the next couple of years.  If interest rates rise and/or home price appreciation slows you will see many home owners steping into the murky waters of mortgage delinquency. Creative loans are very risky as they make it cheaper in the beginning for home buyers to afford a home but are much more risky over the long term.  Fixed rate mortgages are the best way to invest in a home over the long term.  Many people will soon be victim of a payment shocker when they see how much their mortgage payments have gone up.  The result of this can be good or bad, depending on how you look at it. If the situation starts looking bad for you, the best thing to do is to refinance your creative loan and get a fixed rate loan.  Regardless of if you can afford the fixed loan, this still should be your first step.  The ARM will just keep going up and soon the payment will be more than a fixed loan would.  After you refinance you may want to see a financial advisor to plan how you will deal with the burdon of a high mortgage payment. For others who may want to break into the real estate market in Lake Tahoe this may be the time to buy as homes will be sold off at cheaper prices by people who cannot afford the payment anymore.  I expect there to be a plethora of reasonably priced real estate available in Lake Tahoe during the next couple of years.  As well as the vast amount of homes that will appear on the market, mortgage rates are still reasonable and should make buying a home delightful for a change.

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