Monday, December 12, 2005

Mortgage roulette

Will this mortgage be the bullet?

Many years ago I managed real estate offices during a real estate market in shambles.

Prices were dropping on houses. Creative financing was exploding, loans were being deserted, alone with the houses they were secured against.

Real estate prices dropped by at least a third from their highs, in special situations even further.

This time it will be worse.

I don't know when the mortgage bullet will be in the chamber, but each raise of interest rates is a spin of the cylinder and a pull of the trigger.

As a parallel I remember when Money magazine put out an article on unloved stocks, probably beck in the 1980s. Intel was at a PE under 5; that was a great time to buy. In the year 2000 Intel and its ilk were highly touted and even higher priced, a good time to sell.

Today real estate is highly touted, refi loans and equity cashouts are common. It is a good time to sell.

You know your situation, - is there a way to reduce risk and take some profits?

Consider your options.

The end could be tomorrow morning, or 5 years from now, - no one knows when. What we do know is the end was not yesterday, and we still have some profits in our real estate to protect. Consider your loan position of your properties, perhaps your mortgage has a short, hot fuse.

What is next? read this for a solid guess.

Make up your own mind.

If you have had a great ride on real estate, perhaps it is time for a break and some thought.

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