Michigan Foreclosure Report by Mark Ijlal

The Feds are at it again - raising the interest rates to another quarter point . You can read the MSN story here.

So what does it holds for Michigan real estate investors?

1. If you are financing your own flips by HELOC's - (Home Equity Line of Credit) better start moving to sell these houses quicker because that money is getting expensive by the minute. Especially if you had the HELOC opened for a while and any promotional incentives are over. Bankrate has a good article on the entire impact of interest rate hike but this is what they had to say about HELOC:

Since Bankrate.com began surveying a $30,000 line of credit in July 2004, the average HELOC rate has rocketed from 4.71 percent to 7.45 percent. Variable-rate HELOCs will continue to increase for existing and new borrowers alike. Lenders will be quick to reprice HELOCs on the heels of the Fed's rate hike, with most borrowers noticing the higher rates within one or two statement cycles.

HELOC rates will continue to closely mimic moves in the prime rate. The impact on monthly payments will be modest for borrowers in the early years of a HELOC where the required payment consists only of interest. Be wary, however, of accumulating a large balance in the interest-only years that will have to be paid off at higher interest rates in the repayment period. This can cut both ways however, as borrowers may be accumulating a balance now that may ultimately end up being repaid as interest rates decline at some future point. Gauge your sensitivity to higher payments and, if your budget is flexible enough to absorb it, a HELOC might be right for you.

2. More homeowners getting hit on the head hard especially if they are in bad credit (sub prime) ARM's. A general misconception is that most homeowners get these laons for 2-3 years, fix their credit in this time and refinance over to the conforming loan.

Well may be 1 in 50 really does that. My experience is pretty cynical. Unless the homeowner really sits down and figures out why and how they ended up in bad credit, which is a very are occurance anyway, they are most likely to stay in the loop of falling further and further in their FICO.

Meaning when the times comes - they either cannot refinance or they have to go to another, higher interest rate sub prime mortgage.

Most of them cannot afford the hike - they either sell (read: motivated seller) or leave (read: foreclosure).

On a side note it is always amusing to talk to people with good credit - they think that everybody in the world has good credit. On the other hand it is also amusing to talk to people with bad credit - they think that everybody in the world has bad credit.

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