In an uncertain housing market, people who are looking to buy, sell or refinance a home face many tough decisions. According to Keith Gumbinger, there are some smart ways to operate no matter what the market looks like. Jean talks with Keith, vice president of the mortgage research firm HSH Associates, about how to play it safe when it comes to mortgages:
- Shop around. Whether you're looking for a mortgage, a home equity line of credit or to refinance your home, rates can vary significantly within a single local market. "It can be a huge disparity from one side of town to the other side of town," Keith says. Shop around with various credit unions, online Internet lenders, and both large and small banks before you buy.
- Understand the long-term financial commitment. Don't buy a house based on what the monthly payment is when you first get the loan—buy a house based on what the monthly payment could be 10, 20 or 30 years down the road. Then, determine whether or not you'll have the income necessary to manage the terms and conditions of that loan. "Borrowers who merely stepped in and said, 'I can afford the monthly payment today' are absolutely the ones who are in the most trouble tomorrow," Keith says.