Mortgage Rate News

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Sometimes, it seems like we need something, and that a loan is the only way to get it. Before you decide to borrow, it is a good idea to think about whether you really need the money for something. You should also consider the type of loan you are getting. It might seem like a good idea at the time, but the end results could be scary. Here are 5 scary loans to try and avoid:

1. Interest only loans: These are mortgage loans that really are scary. And they were part of the issue in the recent mortgage market crash. You borrow money, but at first — for three, five or seven years — you only pay the interest on the loan. You aren’t making any headway on the principle. It seems like you can afford a bigger house, because the payments are so low. But once the initial term expires, and you have to start paying the principle, if you haven’t managed to refinance or seen an increase in income, things get really scary really fast. You could lose your house.
2. Car title/payday loans: These types of loans seem convenient when you’re strapped for cash, but the interest rates are high, and, in the cash of a car title loan, if you can’t repay, the car can repossessed.
3. Margin loans: These loans are used to buy stock. You can make a lot of money buying stocks margin, but you can also lose a great deal. The greater the leverage, the greater the risk.
4. Advance loans: Whether you are getting a credit card advance or an advance on your tax refund (a tax anticipation refund), the interest rates are high, and fees can be atrocious. Credit card advance loans can result in going over the limit (and getting more fees), and what happens if you don’t quite the tax refund you anticipated?
5. Co-signing: Co-signing on a loan can be scary, scary stuff. You agree to take on the obligation of the loan. This can be detrimental, since it can impact your credit if the person you are co-signing for doesn’t pay. And, of course, you don’t even get the benefits of using whatever it is you co-signed for.

Can you think of other scary loans that should be avoided?And, in honor of Halloween, a look at what Disney Villains have to say about money:

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It looks like the recession is over — at least technically. With Quarter 3 GDP numbers being reported today, it looks like the U.S. economy has moved from a period of loss into one of expansion. Economic data today was generally good, reports MarketWatch:

Along with improvements in key monthly figures on output and sales, the rise in real gross domestic product means the Great Recession is likely over in a technical sense, even as further job losses occur. A formal call on the end of the recession isn’t expected for months. …

“I anticipate that this is the turnaround, and that the numbers from here on out will be positive,” said Council of Economic Advisers Chairwoman Christina Romer in a televised interview.

Some are crediting economic stimulus measures for helping with the turnaround. It is important to note, though, that recovery is likely to be slow, and that for many individuals, a personal recession may continue for a while, since this economy is likely to see a “jobless recovery.”

Improving economy and buying a home

It also means that there is less of a chance of a double dip recession, or a return to another housing market dip. If this is the case, than it is quite likely that the housing bottom has already passed. If you have been waiting on buying  a home, it might be time to reconsider. It might be a good time to buy, while home prices are still low, mortgage rates are near record lows, and buyers have the upper hand.

In the end, an improving economy is likely to mean that some of the great opportunities and bargains that we are familiar with may not be available for much longer. It is true that the first time home buyer tax credit may be extended, but other than that, it is unlikely that all the great prices being seen right now will last.

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Many people have been trying to time the market, waiting to buy when the housing market hits bottom. However, there is an argument that the housing bottom has passed, and that the chance to buy at the bottom was earlier this year. With the Case-Shiller index showing that the housing market is improving (despite issues related to home sales recently), there are some that argue that the time to buy was back in February.

Here is what The Mortgage Reports says about the economy, housing market and when to buy:

But now, as the Case-Shiller Index shows improvement, it’s making a case that the economy is coming back from the brink.

An improving economy will harm home affordability.

Soon, government stimulus will fade, mortgage rates will rise, and sellers will regain the upper-hand in negotiations. Based on the Case-Shiller home value data, the “right time” to buy a home may have been in 7 months ago — while the status of the recovery was still in doubt.

Of course, there are concerns that there could be a double dip recession, with another drop on its way. Indeed, some are speculating that the housing market could dip again next year as government aid is withdrawn and unemployment stubbornly refuses to improve. That could mean another housing bottom that could provide buying opportunities.

If you are planning on buying, though, there is no reason to keep trying to time the market. Mortgage interest rates are still relatively low, and it’s still a buyer’s market. The only thing I’d wait for is to give it a few weeks to see if Congress decides to extend the home buyer tax credit deadline, and expand the program to include those who are not first time home buyers. In the end, you are unlikely to find such deals for another decade or so, and getting in now is a fairly good plan, especially if you are simply buying a home to serve as your primary residence.