Northeast Pennsylvania Real Estate and Mortgage Information

I attended a conference today on the state of the banking industry and we are not out of the red just yet. The problems were supposed to be over last quarter when most of the financial industry reported heavy losses. But these loses are still coming in and signs of other problems are creeping up. According to the research presented today, there are still large amounts of variable rate loans and interest only mortgages that have not reset (or changed to full principle and interest payments). I do not have the exact numbers as to how much in billions will be resetting, but these are the same types of mortgages that are causing a lot of the problems. Simply because peoples payments go up when the loan resets. Add this to the increasing costs of everything else.

For example:
If you have a $150,000 30 year interest only mortgage at 6.5% with interest only payment is $812.00. But at the end of that interest only payment schedule the new principle and interest payment will increase to $1013.00. That’s a $201 increase in your mortgage payment.

The good news is that most of these mortgage resets should be out in the open by the 2 quarter of 2009. By that time we will more than likely see more mortgage companies out of business. All this turmoil makes it especially important for home buyers to check out multiple banks before committing to take a loan. Not only to check the rates and fees, but also to make sure that company will still be around. According to the FDIC website there was 18 bank failures just in July 2008 alone. A lot of information is also available on different mortgage companies at various news outlets. M&T Bank remains strong as compared to our peer group.

Erick Yurkanin
Senior Loan Officer
M&T Bank - Scranton / Wilkes Barre, PA
570-307-2600
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