Dream Home or Dream On: Part III

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Knoxville (WVLT) - The east, midwest, and west coast home mortgage meltdown has trickled down, creating more of a buyer's market here in East Tennessee. Should you make an offer on your dream home? Re-finance your loan? Or dream on?

Volunteer TV's Gordon Boyd shows us your answer may depend on whether you're trying to sell your current home or generate cash flow to save or spend.

"We didn't get to the point where we were talking price with anybody, until this," said Mark Lapczynski, who recently moved to East Tennessee.

Mark and Donna Lapczynski admit how they bought their dream home in West Knoxville's Far View is a far cry from how many would try to bargain in our buyer's market.

"When the price was offered by the builder, we thought it was a fair price based on the other prices in the market, and we really didn't counter," Lapczynski said.

"I've seen builders be more negotiable in the last little bit," said Jim Ford from the Knoxville Area Association of Realtors.

Realtors Association President Jim Ford says builders and sellers are finding they may have to take less, given that mortgage and value meltdowns elsewhere are keeping some buyers out of our market

"I've got customers that can't sell their house in Florida, or Memphis, or Los Angeles, so they can't buy, until they sell there," Ford said.

"This is for us to live in, hopefully, for the next 40 or 50 years," Lapczynski said.

Wanting to stay put is one thing, but if you feel you can't afford to trade up or downsize?

"We're still seeing quite a few re-finances," mortgage broker Chrissi Rhea said.

Mortgage Broker Chrissi Rhea says re-financing makes a lot of sense -- particularly if you need up-front money to remodel, but credit counselors question whether it makes sense if your loan's only a couple of years old.

"You don't want to finance just to be re-financing because your rate may go down half a point. With the costs, the closing costs, it's really not gonna benefit you that much," said Joe Garrison of Consumer Credit Counseling Service.

Credit guru Joe Garrison says it's worth trading one fixed rate mortgage for another, if you can cut your rate one-and-a half to two percentage points. He'd dump an adjustable mortgage regardless, certainly well before you're due for the re-set. And for,

"Definitely, not another adjustable rate mortgage. You want to go to a fixed rate mortgage" Garrison said.

Broker Chrissi Rhea buys the argument that fixed rates buy piece of mind, but if your loan is old enough that you've added equity, she'd urge re-finance regardless.

"You're now refinancing at a lower principle amount, so you really can't go for interest rates," Rhea said.

Mark and Donna Lapczynski are experienced climbers on the mortgage mountain. Re-financing is not on their radar yet. Their key to keeping their finances focused and

"Living someplace is a cost, and we've chosen this cost, and we're okay with that, and we're not going to second-guess ourselves down the road," Lapczynski said.

Mortgage brokers say East Tennessee's economy and our housing market's steady history, mean you could refinance for more, or less money at similar or better terms than a first mortgage, provided your credit and assets are solid, but Credit Counselors advice thinking twice before leveraging that dream homestead, lest you risk losing more than sleep.

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