Housing Debt – Should You Stay or Go?

Real-estate in the United States over the past 60 months has continuously seen housing prices fall. Their current values ​​are now less than (some far lower than) what is currently owed on their mortgages. This is true in many areas of the US with few geographical exceptions. As inflation increases, expect the value of your home to decrease even more. The value of your home is expected to lose an additional 5 to 8 percent in 2012 alone. This also is absolutely not the time to go buy a new or used home, once inflation reaches around 20 percent most likely you will see a total collapse in the real estate market. A large number of Americans now believe that a second "Great Depression" is very possible within a few years.

What should you do?

GO – If you DO NOT own your home outright and have a variable rate loan …

Then sell your home now & Rent! Many smart economists and market forecasters are highly recommending that anyone who owns a home today with a variable interest rate mortgage sell out now regardless of the profit or loss incurred. Holding onto any variable rate loan will keep costing you more money each month. Because of rising inflation your interest rate will continue adjusting up to keep with inflation.

Because of this, at some point depending on your financial situation you could have lost your house to inflation as well. So selling it now will by far save you more money. Once you sell do not buy a new home now. Houses will become consider cheaper as market prices continue to fall due to rising inflation. So lease your next home and get that new house after everything collapses for much less than current prices. The money you save and any possible profits from the sale of your home can be put to work now, by investing in physical gold and silver to hedge against rising inflation.

STAY – If you own your own home free & clear, have a low fixed rate mortgage or …

If you're in no way going to give up your home (probably many will feel strongly about this) then get yourself a fixed rate loan today. Get rid of that variable rate loan fast. Act today and not tomorrow while lower interest rates are still available. If you have a higher fixed rate try re-financing to get the lowest fixed rate possible even if it costs you more in fees and points. A lower fixed rate will save you that much more money each month when the rates start climbing. The recent US credit rating downgrade from Standard & Poor's to AA + from Triple A makes it possible that current low rates will start increasing. If you fall into a credit trap where you do not now qualify for a new fixed rate loan it is best to sell out now as I stated above, regardless of how attached you are to your current home.

Fixed rate loans are actually your friend during an inflationary period, because your loan will not be intolerable to future rate increases keeping up with inflation. Thus your borrowing costs will actually reduce as inflation continues. This means you're paying less out of pocket the higher inflation goes. One more comment on this is not to pay off your loan early by paying down your principle with additional payments. You're actually throwing your money away if you are doing this now. Money that you would normally want to use to pay down your mortgage now would best be utilized by acquiring physical gold and silver that will hedge against inflation. Throughout history, gold and silver has always protected investors against virtually any and all economic calamities that have ever developed. And NOW at this specific time, Gold and Silver will be absolutely critical to your financial survival.

Tom Genot –

Source by Tom Genot

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