Dealing with the Bear Times of Mortgage Markets

Building homes in Ringwood New Jersey back in the early eighties, I watched a thriving sales market whither as mortgage rates rose. The higher the rates followed the mortgage market trend of adjustable rates. This was the same mortgage market trend mirrored in recent times.

The lambs are led


I cringed now as I cringed then. Eager homeowners lured by the lower rates and the more lenient approval process of the adjustable-rate yielded by the mortgage market. Now, as then many of the buyers were first time buyers who needed the leniency edge. Notice I said edge and not break. Even I could foresee the long term would offer them no breaks as rates were sure to rise. The result for many of the families was a financial slaughter.

Is there survival in this mortgage market?

Going back to the early eighties’ experience, I can say yes there will be a survival in this mortgage market. On all sides, the building, the buying, and the selling. Each sector will have its hurdles but it can be done.

New home prices rise in a mortgage market like this.


Believe it or not, it is a selling strategy that works. The market slows and new construction home prices begin stepping up gradually. It is a technique that takes new buyers on the edge and pushes them into action before the home they want goes out of reach. The reason being these people find ways to deal with the higher rates now in anticipation of the downward swing. Furniture and accessories are put off and down payments many times are supplemented by family. It is a short term method to attract sales that work.

People who sell in this mortgage market

Usually the sales in the high-end market or smaller homes for empty nesters looking to downsize remain active. Of course, companies that supplement transferees, (think the acronym for I’ve Been Moved) also feed the real estate and mortgage market. Also, some people choose to relocate from a high-end market to a lower-end market during this downswing. They get more bang for the buck and have the equity already behind them. Plus they usually can afford to wait it out for a buyer.

The prudent buyer


This person scours for reseller home deals in this mortgage market. Again this is a person with equity behind them that can afford to wait out the mortgage market. A lot of home flippers act on homes where the price has significantly lowered because the family needs to get out from under their adjustable mortgage. Their loss is someone else’s gain. A true entrepreneur sees opportunity in this market. If you’re inexperienced with buying a home and unsure of the mortgage setup to maximize the buying opportunity, it doesn’t hurt to get an expert opinion about these things from professionals like the spearmortgage team.

So, yes there is survival in this mortgage market.

For those with savvy, there will be the benefit of making a profit. I was privy to know a young couple that was renters during the eighties. The started during the most difficult part of the mortgage market to buy their first home. They never moved in. The husband is a master carpenter even at his young age performed a few inexpensive improvements. They flipped the house two months after purchase. For several years they continued to rent while flipping houses. By the time the mortgage market began its downturn, they lived in a home worth short of half a million with a fifty thousand dollar mortgage. They both also by that time had become real estate agents. Today they live in an even bigger house and deal in high-end real estate.

Opportunity can be had in any mortgage market.


Yes, you do have to have certain resources. You have to do your homework on both the real estate and mortgage market. You have to be willing to have alternatives and a backup plan. You also have to weigh your risks and not be so quick to jump in. Going back to my experience in the eighties, it was tough for builders. Those that survived were the owners and the tradesman willing to find ways to employ their skills. And of course people with determination, savvy, and the willingness to look for opportunity or even create it do more than survive. They profit. Just explore your options fully before you decide. You may find your silver lining in the cloud of an upswing mortgage market.

Charging Your Mortgage Payments

Would you want to earn cash points for your credit card by charging your mortgage? American Express allows cardholders to charge their mortgage payments. American Express is the first credit card company to provide this.

Well, don’t get too excited. You have to have a mortgage with American Home Mortgage Company. However, is this the beginning of a new trend?

American Express has a Cashback program with the American Express Blue Card. I have had it and it’s pretty good. They also have other point programs. However, so far it appears to apply to the American Express Blue Card cashback program.

There are limitations to this program besides using the American Home Mortgage Company as the lender. American Express is limiting this to cardholders it pre-authorizes before enrolling them in this program. American Express will examine the mortgagee every month before the payment is charged to ensure that the loan is current.

This is also limited to new home prime loans or refinancing prime loans. This means no subprime features which have become less popular these days with lenders. Adjustable Mortgages are also allowed, however, with limitations. This appears to be more geared towards those with good credit and conventional loan to value ratios. Higher ratios are given to government loans like FHA and VA. Those type loans are not permissible under this program. I have not seen any restrictions for investment loans or vacation homes. There could also be a minimum down payment above what you could normally get without this program. You would have to contact American Home Mortgage for further information on that.