Mortgage Strategy Key to Success for Texas Homeowners

By Richard Barrington
Local Lender Columnist
Jun 11, 2007
Even though housing prices in Texas have held up relatively well, there are lessons to be learned from the woes in other parts of the country. A strong real estate market does not mean you are immune to the risk of foreclosure; your risk depends more on your personal mortgage strategy than on the strength of the market as a whole.

Prices Stable, but Foreclosure a Rising Risk

Median home prices for 2006 exceeded those for 2005 in major Texas metropolitan areas such as Dallas and Houston. Even so, the risk of foreclosure seems to be rising. For example, Dallas County foreclosures scheduled for April of 2007 were 11% higher than those in April of 2006.

Foreclosures can rise even in the face of stable home prices because the market price of your home doesn't have any effect on your ability to make the monthly mortgage payments. The key to avoiding foreclosure is to have a sound payment strategy in place from the start.

Lower Rates an Opportunity to Set Payment Strategy

Because interest rates are lower than they were a year ago, this is a good time to set a payment strategy:

• Do a reality check to see if you can afford the payments on the mortgage amount you are considering. In other words, if you can't afford those payments under relatively low interest rate conditions, you probably won't be able to afford them under most other circumstances.
• If you have an existing fixed rate mortgage, check to see if you could refinance at lower interest rates. Anything that eases the monthly budget a little moves you one step further away from foreclosure.
• If you have an adjustable rate mortgage and can afford your current monthly payments, you could lock in that payment level if you refinance at fixed rates while those rates are relatively low.

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.