It seems like every tenth house we see in our neighborhood is going up for sale these days, with the “Sale Pending” sign up within a week afterwards. But in reading this month’s issue of Kiplinger’s Personal Finance, I read an opinion that closely reflects my own future predictions (not that I’m Miss Cleo or anything). Economist Mark Zandi describes a scenario that mortgage rates will rise by 1 to 1.5 points of the next year, and that home prices will flatten but not fall. However, due to the large amount of interest-only and adjustable-rate mortgages out there, and “…in 2006 and early 2007, we’ll be in the middle of a massive loan adjustment.” Thus, there will be a high number of foreclosures and delinquencies, with bargains to be found.
It’s a little dark to be hoping to pick up a foreclosure or pre-foreclosure house from somebody else in financial trouble, but people are taking undue risks these days and overextending themselves. The article notes that about “17% of mortgages originated in the second half of 2004 were interest-only.”
In the meantime, I’ll be saving up my money and looking to learn about how to find and approach homeowners in pre-foreclosure status and perhaps get a great deal while helping them avoid a foreclosure. Or find out ways to find and negotiate good foreclosure deals from banks.