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Peter P
2006 Feb 15, 8:33am
Anyone knows if you have an ARM, but fixed for the first 10 year, what is the risk of this type of loan?
One risk is that interest rate may be higher on the 11th year. On the other hand, if you sell before then, the proceed may not cover the loan principal. It all depends on your cost basis, of course.
Also, if interest rate goes up within this 10 year period, fewer people will be able to afford your house at a given price.
There is no particular risk if you intend to pay off the mortgage by the end of the 10-year period.
And can anyone comment on the Las Vegas housing bubble? $300K for a 2000 sq ft. new home, good investment?
Hard to say. I love LV, but I am not familiar with the market. Ask ptiemann.
Peter P
2006 Feb 15, 8:34am
And can anyone comment on the Las Vegas housing bubble? $300K for a 2000 sq ft. new home, good investment?
Can you obtain positive cashflow without using Option ARM?
Peter P
2006 Feb 15, 8:44am
Something was wrong with the Google thread, it would not scroll down to the bottom, nor did it include the submit comment box. Is that my computer or the thread?
Hmm, strange. Try refreshing the page.
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One axiom of real estate is that each market is local and unique. However, money is national or even global. Since credit has been the principle contributing factor in this bubble, we should accept the fact that all "local" housing markets will interact.
Many markets are now in decline. One very reasonable expectation is that the mortgage market will dry up because of the reflexivity between collateral value and credit. If and when this happens, the correction will come to the Bay Area, no matter how "special" and "immune" it may be.
#housing