lower house prices equals higher mortgages?

Answer 1

An existing fixed-rate mortgage does not change with the value of the house.

The problem being discussed in the press right now concerns adjustable rate mortgages that are having their monthly payments raised because interest rates are higher. This becomes a problem for folks who 'bit off more than they can chew' and can't afford the new higher monthly mortgage payments, and if their house is also worth less in the market than what they paid, they can't even sell to get out from under the mortgage. This impact will push foreclosures higher.

Answer 2

A mortgage is a legal claim against real estate for a given sum of money, plus any interest accrued. That said, lower house prices mean that less money would need to be borrowed for purchasing a house and, as a result, the amount of the mortgage would be lower.

What I think you were trying to ask is whether lower house prices might cause interest rates to drop. If this is what you were trying to ask, my answer is that house prices have little to do with the interest rates. What the reflect is the lack of demand from possible buyers, meaning that people aren't buying houses so the prices are dropping in order to make houses salable. Because fewer people are buying houses now than a few months ago, the demand for borrowing money has also dropped, therefore the interest rates will in all probability fall. As people begin to buy more houses when the cycle turns, the prices will rise, as will the interest rates, as will the mortgage balances.

Answer 3

Lower house price means smaller mortgage.

For example, if a house costs $500K and you have $100K for down payment, the mortgage loan is $400K.

If the house is $300K and you have $100K for down payment, then the mortgage loan is only $200K.

As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.

Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).

Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.

Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.

Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!

Good luck!

This article gives you tips on negotiation:
http://biz.yahoo.com/brn/060909/19463.html

Articles about current market:
http://money.cnn.com/2006/09/25/news/economy/homesales2/index.htm?postversion=2006092513

Answer 4

A lower house price would mean a lower mortgage.

Answer 5

Not true. Your credit score and lending institution have more to do with mortgage rates than the residence cost. Obviously, lower house price equates with a lower mortgage payment. I have to agree with "SURENUF"'s answer.

Answer 6

No, lower houses equal less equity. Lower houses also means higher interest rates. High prices means low interest rates

Answer 7

nope. High ltv (amount owed compared to apprasial) will. Interest rates are tied to economy, good economy higher rates.

Check for inflation and employment to evaluate "good economy".
Gov stopped economic deppresion after 911 of dropping rates (more people borrow, more spending more jobs), and now inflation is 4.7, too high, so rates should be going up like they have been. But very stable. I would like to think we will stay under 7% for the 00s

Answer 8

Lower house prices might mean "handyman special". Be sure to ask questions.

Answer 9

You need to further explain your question or make a better statement.

Answer 10

Not necessarily. depends on the rate terms.