by: Charlie Essmeier
Today’s real estate market is a volatile one; prices are at record levels and Interest rates are favorable, but foreclosures are increasing. Wages haven’t kept up with home prices and some buyers who had to stretch to find a way to obtain a mortgage in the first place are having trouble making their payments. Usually, if a buyer cannot meet his or her mortgage obligation, the lender forecloses, taking the home and leaving the buyer without a place to live and a tarnished credit record. If you are having problems paying your mortgage, can you avoid this scenario?
Depending on your type of mortgage and your lender, you may have other options. Most lenders, wary of rising foreclosure rates, would rather work out some sort of solution than take your home. Lenders are in the business of lending money, not selling houses, and the process of foreclosure is a tedious one that most institutions would rather avoid. The first thing you should do if you find yourself with a problem making your payments is to call your lender and discuss the matter with them. The sooner you contact them, the more likely you are to work out a solution that’s agreeable to both of you.
Here are a few possible options for buyers who are having temporary cash flow problems:
# Your lender may agree to temporarily suspend payments until you are able to resume paying them. Alternatively, your lender may be willing to restructure or refinance your loan.
# If your loan is insured by the department Housing and Urban Development or the FHA, you may be eligible for a one-time payment to bring your mortgage payments up to date. For details, contact the HUD or FHA directly.
# You may be able to sell your home to pay off your loan. This is clearly not the first choice for many homeowners, but it is a better option than losing your home outright. Rising real estate prices during the last few years have left many homeowners with a lot of equity. You may be able to sell your home for more than you owe, which will relieve your debt and leave you with some cash left over.
# Your lender may be willing to simply take the home back, rather than force you out of it. You lose the house, but your credit rating will not likely suffer.
These are just a few choices that may be available to you. Your lender may offer other solutions, as well, so don’t’ hesitate to call them if you find yourself in financial trouble. It is far better to contact the lender and tell them of your problems than to have them call you and ask, “Where is our money?” Be forthright and tell them that you want to work something out, and you may find a solution that allows you to keep your home. It never hurts to ask.
About The Author
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity loans .
Home Loans and Mortgages – One Third of Homes in U.S. Overvalued
by: Charlie Essmeier
A new study by National City Corp. looked at home values for 299 American cities and compared them to where they “should be” based on a number of economic factors that determine home prices. The results were not encouraging; homes in nearly one third of America were judged to be “extremely overvalued.” That’s the part that’s getting headlines. A complete read of the report shows that things are even worse, as 100 cities in the U.S. have values judged to be too high by 18% or more. What does this mean?
It will come as no surprise to most people that the areas judged to be the most overvalued are in California, Florida, and New York and Massachusetts. Home prices in these states have increased at a rate that far exceeds the increases in salaries in these areas. When homes are priced in a way that is disproportionate to income, they become unaffordable. The mortgage industry has come up with a number of clever solutions to this problem by introducing an ever-increasing number of creative loan products. Interest only mortgages, where buyers only pay interest on the loan, rather than principal, for the first five years of the loan, and Option ARM mortgages, with “teaser” interest rates that can run as low as one percent, have allowed people to purchase homes they otherwise would not be able to afford. Neither one of these dangerous loan types contributes any money to the actual purchase price of the home, leaving their buyers in a precarious position should prices fail to keep rising. The nationwide increase in foreclosure rates suggests that the market is probably peaking.
What does this mean for the average buyer? Home prices in the top 100 markets in the U.S. are overpriced by anywhere between 20% and 70%. Prospective buyers should realize that any home they purchase now will probably not appreciate much more in the near future, and they should finance their purchases with this in mind. Buyers should make certain that they can actually afford the purchase price and that they can afford a mortgage that will reduce the principal of the loan over thirty years. A home purchase with any other terms would have to be considered a risk, since prices are more likely to fall or stay the same in the future than they are to rise. Use some common sense when making a purchase, and all will be well.
About The Author
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.
A new study by National City Corp. looked at home values for 299 American cities and compared them to where they “should be” based on a number of economic factors that determine home prices. The results were not encouraging; homes in nearly one third of America were judged to be “extremely overvalued.” That’s the part that’s getting headlines. A complete read of the report shows that things are even worse, as 100 cities in the U.S. have values judged to be too high by 18% or more. What does this mean?
It will come as no surprise to most people that the areas judged to be the most overvalued are in California, Florida, and New York and Massachusetts. Home prices in these states have increased at a rate that far exceeds the increases in salaries in these areas. When homes are priced in a way that is disproportionate to income, they become unaffordable. The mortgage industry has come up with a number of clever solutions to this problem by introducing an ever-increasing number of creative loan products. Interest only mortgages, where buyers only pay interest on the loan, rather than principal, for the first five years of the loan, and Option ARM mortgages, with “teaser” interest rates that can run as low as one percent, have allowed people to purchase homes they otherwise would not be able to afford. Neither one of these dangerous loan types contributes any money to the actual purchase price of the home, leaving their buyers in a precarious position should prices fail to keep rising. The nationwide increase in foreclosure rates suggests that the market is probably peaking.
What does this mean for the average buyer? Home prices in the top 100 markets in the U.S. are overpriced by anywhere between 20% and 70%. Prospective buyers should realize that any home they purchase now will probably not appreciate much more in the near future, and they should finance their purchases with this in mind. Buyers should make certain that they can actually afford the purchase price and that they can afford a mortgage that will reduce the principal of the loan over thirty years. A home purchase with any other terms would have to be considered a risk, since prices are more likely to fall or stay the same in the future than they are to rise. Use some common sense when making a purchase, and all will be well.
About The Author
Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.homeequityhelp.net, a site devoted to information regarding home equity lending.
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