In every cloud there is a silver lining -- it looks like that adage is proving its validity once again.

"Loans are possible to get and they're affordable; they're accessible. The subprime portion of the market -- the excesses in that market -- have caused tremendous problems for the market as a whole, of course, but most borrowers do qualify for the prime mortgage," says Dr. Susan Wachter, Professor of Real Estate at The Wharton School, University of Pennsylvania.

According to Dr. Wachter's newly-released findings, "We have a really significant jump in the use of this fixed-rate mortgage; it's up 30 percent and the adjustable-rate mortgage is actually down almost 50 percent. So there is a significant move," she says.

Additionally, while meltdown was occurring in the subprime mortgage world in the second quarter of 2007, for the conforming (under $417,000) 30-year fixed-rate mortgage, it not only became more affordable but also remained widely available and had little rate fluctuation from the previous quarter, according to her report.

Her tip to consumers is geared especially to first-time homebuyers who aren't able to put down 20 percent. She says try to avoid a piggyback mortgage because it can complicate the approval process while adding additional risk. "Instead, consider mortgage insurance, which can help you obtain a single low down payment mortgage without any unnecessary added risk." In Dr. Wachter's report she also warns homebuyers, "Remember that the home price appreciation boom is over and home values are declining in many markets. Buyers should play it safe and lock in an interest rate now for an affordable monthly payment."

Dr. Wachter's report states that mortgage insurance is increasing. In the second quarter of this year, 560,000 borrowers used private mortgage insurance which represents a 36 percent increase over the previous quarter. Mortgage insurance use has increased nearly 70 percent, since the beginning of 2006.

Again pointing to where the real mortgage meltdown is occurring, Dr. Wachter cites figures from the Mortgage Bankers Association in her report. "In the second quarter and the first quarter the seriously delinquent rate -- which measures loans that are 90 days or more late -- increased only marginally for prime Fixed-rate mortgage borrowers and actually decreased for subprime fixed-rate mortgage borrowers. By contrast, this rate increased 227 basis points for subprime adjustable-rate mortgages in the second quarter."

Dr. Wachter also suggests that much of the crisis occurred because borrowers somehow got into an adjustable-rate mortgage even though they could have easily qualified for a more secure loan.

"There's research evidence to support that borrowers do not always get a prime mortgage when indeed they could qualify for a prime mortgage ... . Borrowers should know what their credit score is and should bring that information with them. They should be asking for a prime mortgage. They should be asking what the cost of it is. Our index is to support that because that tells them, if they are a prime borrower, what the market rates are out there," explains Dr. Wachter.

She adds, "By locking in an affordable rate now with a fixed-rate mortgage, new buyers and refinancing borrowers can avoid the payment shock that is imminent for an estimated two-million American homeowners, as their adjustable-rate loans reset in the coming months."

The bottom line, according to Dr. Wachter, is that the affordable fixed-rate mortgage remains affordable.

Published: October 8, 2007

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Phoebe is a writer, speaker, and author. She is the Director of Business Development for Quality Service Certification and a trainer in customer service for the real estate industry. She is a Realtor with The Guiltinan Group, a division of Prudential California Realty. Her articles, feature stories, and columns appear in various publications including The Coast News, Del Mar Village Voice, and Rancho Santa Fe Review in San Diego. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Phoebe's writing is also featured in Donald Trump's book: The Best Real Estate Advice I Ever Received. She is the author of If the Trash Stinks, TAKE IT OUT!: 14 Worriless Principles for Your Success. Contact Phoebe at 858.259.3646 or . Visit PhoebeChongchua.com for more information.