What is an expansionary monetary policy and how can if affect me in buying a house?
447309
An expansionary monetary policy is one in which interest rates are going down. This has the effect of expanding the supply of money, since money is easier to get. A tightening of the money supply is when interest rates rise, a situation we've been in lately. When interest rates are high, this will increase your monthly mortgage payment on your house. When interest rates are low (during a time of expansionary monetary policy), your monthly mortage payment for your house will be lower. In the past, when interest rates have risen, we've seen the price of houses fall a bit so that buyers could afford them. However, we haven't seen the price of houses go down lately, even though interest rates have been rising.\n\nThe Federal Reserve Bank of the US formulates monetary policy and can effect interest rates. It tries to fight inflation by raising interest rates, and tries to perk up the economy by lowering interest rates. Home buyers are affected by interest rates because they borrow money (get a mortage) to purchase a house.
50653
if you intend to stay in a property for a short period of time, then an ARM could still be a good deal. if you intend to stay 5 years or longer then a fixed loan would be better. a sharp rise in an ARMs could occur and force people into negative amortization. it is better to know what your costs will be in the future, then worrying about being homeless because of an interest rate spike!\n\njust my opinion. i have done it both ways in the past and was uncomfortable with the ARM going higher.
270948
Yes it can be.\n\nReal estate is a commodity/asset.  A drop in the US dollar, or weaking in the dollars buying power will mean that an increased amount of currency will be needed to buy the same bundle of goods.\n\nThis increase in the prices for overall goods (inflation) would translate to a greater money supply needed to purchase these goods.  \n\nThe increased money supply means that there is more dilluted dollars competing for the finite number of assets/commodities on the market, thus pushing up real estate prices during times of inflation.
594405
You can always refinance.  If your current loan has a pre-payment penalty, that may apply however.
109835
the federal reserve bank sets monetary policy.  the most important of these policies, the interbank federal interest rate, controls how much it costs for regular banks to borrow money.  this in turn controls how much money there is floating around in the economy, which affects inflation and economic growth.\n\nhere is more information about how the chairman is selected and the responsibilities of the federal reserve board:\nhttp://www.federalreserve.gov/pubs/frseries/frseri.htm\n\nhere is a good site to learn more about how the fed works and why it exists:\nhttp://www.federalreserveeducation.org/fed101/structure/
643106
In economics, inflation is an increase in the money supply or an increase in prices.\n\nThe two most obvious versions of this, each held by some economists to be "real" inflation, are for prices of goods and services in the currency in question to rise, or for the money supply to increase.\n\nPrice inflation is closely akin to "cost of living" measurement, where a "basket" of goods, and comparing the prices at two intervals, and adjusting for changes in the intrinsic basket. But, technically, this is not raw inflation; it is an attempt to determine real-life value of money compared to the members of the society in question, adding other factors like increased expectations.\n\nRaw inflation measurement does not adjust for expectations, but directly measures the change in the price of goods.\n\nThere are different measurements of price inflation, depending on the basket of goods selected. The most common measures are of consumer inflation, producer inflation and GDP deflators, or price indexes. The last measures inflation in the entire economy.\n\nGeneral price inflation is a fall in the purchasing power of money within an economy, as compared to currency devaluation which is the fall of the market value of a currency between economies. The extent to which these two phenomena are related is open to economic debate, though the comparison of a currency to foreign currencies is based on investor demand for currencies, and therefore must at least partially be a matter of perception.\n\nBoth of these are often caused by money being added to an economy, either as printed currency or as virtual money lent to banks or other entities. This is called currency inflation, and can cause price inflation or currency devaluation. But, because the general amount of wealth gradually changes in an economy (as long-lasting things are created, new technologies invented, et cetera), a small amount of currency inflation need not cause price inflation.\n\nSome terms related to inflation:\n\ndeflation is a rise in the purchasing power of money, and a corresponding lowering of prices (the opposite of inflation). \nDisinflation refers to slowing the rate of inflation, that is, prices are still rising, but at a slower rate than before. \nReflation is a term used to denote inflation after a period of deflation, meaning inflation designed to restore prices to a previous level. \nHyperinflation is rapid inflation without any tendency towards equilibrium - that is, an inflation that produces even more inflation. \nIn some contexts the word "inflation" is used to mean an increase in the money supply, which is seen as a cause of price increases. Some economists (of the Austrian school) still prefer this meaning of the term, rather than to mean the price increases themselves. Thus, for example, some observers refer to inflation in the 1920s in the United States even though the prices of some baskets of goods were not increasing at the time. The word "inflation" will be used to refer to a general increase in prices unless otherwise specified.\n\n\nEconomic role\n\nOne effect of small steady inflation is that it is difficult to renegotiate some prices, and particularly wages and contracts, downwards, so that with generally increasing prices it is easier for relative prices to adjust. Many prices are "sticky downward" and tend to creep upward, so that efforts to attain a zero inflation rate (a constant price level) punish other sectors with falling prices, profits, and employment. Thus, some business executives see mild inflation as "greasing the wheels of commerce". Efforts to attain complete price stability can also lead to deflation (steadily falling prices), which can be very destructive, risking bankruptcy for companies that do not react, ultimately resulting in recession (or even depression).\n\nMany in the financial community regard the "hidden risk" of inflation as an essential i
213300
Do not sit and wait for something that is possibly only a figment of someone's imagination.  Plus the area that you are in may not apply.  Also, when this happens, it is very possible that interest rates on mortgage are going to start going up quite rapidly.  Buy now.  Most areas are experiencing a buyers market.  Now is the time!!!!\n\nIf you would like lending advice, go to www.americanhm.com/timothy.kaz ee and there is a ton of info on there.  Plus you can even apply online.
1138041
At each of its meeting, the Federal Reserve examines a number of indicators of current and prospective economic developments.  Then it must decide whether to alter its target for the federal funds rate.\n\nAn actual decline in the rate stimulates economic growth, but an excessively high level of economic activity can cause inflation pressures to build to a point that ultimately undermines the sustainability of an economic expansion. \n\nAn actual rise in the rate curbs economic growth and helps contain inflation pressures, and thus can promote the sustainability of an economic expansion; too great a rise, however, can retard economic growth too much. The Federal Reserve’s actions on the target federal funds rate are undertaken to achieve the maximum rate of economic growth consistent with price stability and moderate long-term interest rates.\n\nCheck this out if you want to know the details;\nhttp://www.federalreserve.gov/pf/pf.htm
392853
The interest rate on 10-year Treasuries is now 50 basis points higher than it stood at the start of the year. This rise coincided with a run-up in many commodity prices.\n\nThe market is concerned about incipient inflation but has confidence (at least no less than a month ago) that the Fed will succeed in eventually getting that inflation under control. The argument is that the Fed impacts the economy primarily through its effect on long-term real interest rates, so that the Fed will somehow have to get long-term real interest rates to rise in order to slow down the economy sufficiently to offset the incipient inflation.\n\nOver the past couple of years a few culprits have been identified as causing low long-term yields including foreign central banks managing their currencies, China & Japan, oil exporters not spending their windfall, Saudi Arabia & Russia, and pension funds moving out of stocks and into bonds to better match their long term liabilities.\n\nWith China slowly moving to a floating exchange regime, Japan ending its quantitative easing, the collapse of many middle eastern stock markets, and pension funds possibly completing their asset reallocation, current long bonds may be reflecting a drying up of demand\n\nAs the housing market continues to weaken it will have serious ramifications for the overall US economy. "The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession. A turn in the housing market is central to our economy with a downturn in housing meaning more than 1.3 million lost jobs, bumping up the national unemployment rate by 1 percent and the unemployment rate in house-mad California by 2 percent. Those numbers don't include likely job cuts in housing-dependent businesses, such as mortgage banking, furniture and building materials. A bubble burst would mean the loss of 5 million to 6.3 million jobs. \n\nThe housing run-up has financed consumer spending, creating more than $5 trillion in bubble wealth. Consumers have used "cash-out" mortgages to pay for everything from new kitchens to college tuition. \n\nTo answer your question Yes the Federal reserve acted too late to slow current inflation and the 2007 recession.
431671
Basically your bank will loan you money based on the value of your property. There are loan ratios so lets say they have a 10% ratio (I think thats normal although others demand more or less depending on the area). That would mean you can borrow up to 90% of the value of the house. If the house is 100K you could borrow 90K. Now if you only owe 50K because you bought it a a few years back and it has gone up in value then your bank will lend you up to the 90K (or an extra 40K) for you to do whatever you want with. Its a cheap way to finance debt for purchasing things like cars, holidays, extensions...than using a credit card or personal loan BUT it means you are putting those things under your home loan and if you dont or cant pay then they reposses your home. You would start by going to your bank and having the home valued by a professional they recognise to see how much you could borrow. A good bank will pay for this service for you as long as you take out a loan with them. You generally set up a new loan (which means a new fee) and then your back to normal. Your home loan repayments will go up but they should be able to calculate these for you so you know what to expect. Remember interest rates are on the rise so factor that in. Happy spending.
43091
I doubt that it will be that serious. First of all, most people will not be impacted. The majority of loans made in the past few years were still 30 year fixed rate loans and most buyers made down payments. The small portion of buyers who were speculating and cannot carry the payments long-term will become foreclosures. Yes, those foreclosures will drive prices down in the areas where they happen, but not everyone has to sell. Only those sellers who are in a position where they have to sell will be impacted. Long term holders of real estate will continue to make payments and will not be impacted. If a property's value drops down below loan value there is no requirement that people will have to "come up with the difference" as you put it, unless they are forced to sell. The most likely bunch of investors that will be negatively impacted are the ones that actually follow the advice of "real estate gurus" that preach the no money down, flipping, and similar deals. I don't think they are a significant part of the market and will be glad to be rid of them for awhile. \n\nThe lenders are not stupid. They do expect some impact in places like California and Florida and are taking steps to spread their risk. Many markets are counter-cyclical and have not experienced any part of the bubble you are afraid of, so lenders are spreading their portfolio risk by lending in various markets. Texas is a good example, where appreciation has been low in single digits. \n\nReal estate markets are micromarkets, and do not behave like stocks. As any agent will tell you, location, location, and location are the keys to real estate. Good locations will mostly continue to be good locations in most cities. People will still like living in California and Florida (although the hurricane risk there makes me question their sanity). Much of the money driving the boom in these areas is foreign money. Few people realize that since the dollar has dropped almost 30% that non-US investors have been buying what they see as bargain property. After all, it is 30% cheaper than it was before for them. Many of these investors pay all cash. They will not be impacted by falling values. Unless the dollar recovers value, that money will continue to flow in. \n\nI've been through two real estate reversals, once in the early 1980's when mortgage rates actually went to 19%, and another in the early 1990's when real estate values dropped about ten to twenty percent in some markets. There was a crash in commercial real estate in the late eighties created by the Reagan administration changing the lending regulations at the same time they increased the reserve requirements for banks that led to the savings and loan bailout. That was coupled with a change in real estate depreciation laws, but this mostly impacted commercial properties (and taxpayers who paid for the bailout). Most people's lives are barely impacted by falling real estate values. Like I said the only ones that will notice are the ones that are forced to sell for some reason other than falling real estate values. \n\nBy the way, I own KBH and have made more money off of it in the form of dividends and stock payouts than I initially invested back in the 1970's. The stock has split so many times I have lost count. The stock can go to $1 and I will still show a profit.
946181
Depends on the state you are in. Check with your bank first. They might be willing to do it. Most lenders won't want to mess with that. A land/home package would be better and get you a better interest rate.
463789
The government in macroeconomics can utlize a number of what are called monetary policies to contract or expand the money supply.  This affects deflation or inflation.  The most common one used is to change the over night lending interest rate to banks.  This is what people are talking about when they say the fed is raising interest rates.  Another thing the gov't can do is issue or buy back government bonds/bills.  This can also increase or decrease the money supply.  Finally the government can change the required reserve ratio for banks which also controls the size of the monetary supply.
65136
Here is what I learned:\n\nMedia is not your friend, all they want is attention and get tune on.\n\nHousing market is not tied to interest rate, 'cause even if the rate increased by 0.5%, it will only increase payment $8 per week for avg. american family. But the real estate is tied to employment, if people don't have jobs, the last thing they buy is a house. So check the turn time for a house to get sold, and if the price is going up or down, with local real estate professional. And check employment growth.
1004006
Not sure exactly what you are asking, but some banks will extend a sort of 'line of credit' for buying realestate. Thes notes are good for a limited amount of time before the real estate must be moved to permanent financing. Selling the property frees up dome of the 'line of credit'
65836
A substantial increase in inflation will diminish the purchasing power of money.  Say you kept $100 under your bed.  If the inflation rate jumped up to 10% (high), then your $100 can't buy $100 of stuff anymore.  Something that cost $100 last year would cost $110 now.  In essence, you lost 10% of your purchasing power.
698539
Housing and Council Tax Benefits received make no difference to your right to buy.\n\nBut if you're still on these benefits, you're not likely to be able to get a mortgage.\n\nIf you've been on benefits before and are now working, there is no problem.\n\nPhone the Council and talk to a Right To Buy officer. (Or they might be called a SOLAH (Sale of Local Authority Housing) Officer.)