Real Estate Investing Links for April 7, 2010

“Are Mortgage Rates About to Spike in the United States?”

financialThe Rentables responds to fears that the government’s imminent withdraw of aid from the lending industry will rapidly raise interest rates. This is because although the Fed has been lending money to banks at very low rates (often anonymously so as to maintain credibility), banks are still hesitant to lend this money out. The result is excess reserves which the banks collect interest on. Because of this, the Rentables claims that when these supplemental funds are taken away, we are unlikely to see immediate change.

“Don’t You Wish Your Banker Was Bank of America/Countrywide?”

Mike Jacka reports on an interesting development in loan modification- Bank of America has recently announced that they will lower the loan balances of borrowers from Countrywide by up to 30%. He expects this program to have greater success than similar plans, because others have only lowered interest rates and not principles. Jacka argues that regardless of interest rate modification, homeowners are still in trouble when their property is worth less than they owe.

“15% Say it’s OK to Walk Away”

depreciationThe Real Estate Economy Watch discusses a recent study conducted by Fannie Mae, revealing that 15% of those polled said it would be acceptable to “walk away” from a mortgage they could no longer afford. A surprisingly low 30% mentioned morality as a reason to continue payment. The article suggests the existence of “strategic defaulters”- those who have walked away from property after months of perfect payment, usually in “negative equity markets” where home prices have previously spiked.

“Why an Onerous Short Sale Process is Good for the Real Estate Industry”

While admitting their frustration, The Real Estate Bloggers assert that the notoriously tedious short sale process may actually be beneficial to the housing market as a whole. The recent mindsets of buyers in the market for homes has been that the only way to buy is through foreclosure or short sale, disadvantaging many sellers. However, while the short sale process remains slow and the perception of foreclosures continues to be that they are in “rough shape,” prices of “traditional sales” will be more stabilized.

“4 Great Real Estate Deals that Won’t Last”

middleYahoo Real Estate reports on temporary factors that have made buying homes increasingly favorable to many Americans. Lower home prices due to foreclosures and short sales truly make today a “buyer’s market.” However, many experts predict that prices will either increase or stabilize by the summer- good news for qualified buyers who have capitalized on the low prices. The low interest rate is another perk potential buyers have enjoyed, but as the government stops buying securities, their price will fall, and interest rates will climb.

“Starting Out Real Estate Investing- Crossing the Credibility Gap”

There’s no doubt that one of the keys to success as a real estate investor is credibility. But when you’re new to investing, especially if you’re considered young and inexperienced, how do you begin to build reliability? This Bigger Pockets article stresses your reputation as the most essential tool to building trustworthiness and establishing credibility in your real estate business.

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