Trouble Meeting Your Mortgage Payments?
As the housing market loses value and interest rates go up, many people are getting a nasty surprise. Simply put, they are having trouble meeting their mortgage payments.
Trouble Meeting Your Mortgage Payments?
In the recent smoking hot real estate market, the conditions were perfect for buyers and sellers alike. Buyers were presented with unbelievably low interest rates. This, of course, meant they could borrow large amounts of money at incredibly low costs. For sellers, this abundance of cash created a tremendous sellers’ market with even unremarkable homes flying off the shelf as fast as they were listed.
The question for many during this period was whether the low interest rates and high home prices were creating the seeds of disaster for many. While times were great, what would happen when the market returned to normal parameters? Well, we are starting to find out.
If you are involved in the real estate market, you already know that home prices are pulling back and interest rates are rising. For people that purchased a home in the last year or so, this is not a good situation. They bought at the top of the market and have little equity in their property. At the same time, they borrowed money on low teaser interest rates that are now increasing to the point they can’t afford the monthly payment. Unfortunately, the pull back in home values means they often don’t have equity they can access to pay the bills.
If you are having problems meeting your mortgage obligations, the first step is not to stick your head in the ground. You need to deal with the situation or your lender will deal with you. In this case, we are talking foreclosure and booting you out of the house. If you sit on your butt and hope, you are not going to be saved. You must act.
The obvious step to take if you are in a bad situation is to sell the house. Is this an ideal choice? Probably not, but do you really have any other option? If you can price the house and pull at least some equity out of it, this option definitely beats defaulting on your loan. If you default, your credit will be a nightmare and it will be a very long time before you can qualify for a loan again.
If you have little equity in your house, you may be surprised you are actually in a better position when it comes to dealing with your lender. First and foremost, the lender does not want the house so it is very unlikely to proceed with foreclosure. Instead, the lender is going to grumble, but should agree to a forbearance agreement. This agreement cuts your mortgage payments in half or eliminates them entirely for a period of time. If you took out student loans to go to college, they were in forbearance while you were actually in school since you could not repay them. The same thing works with real estate. Taking this step can help buy your time to sell the house or come up with some alternative plan for making the payments.
The heyday of the recent hot real estate market is over. Many people are finding themselves in deep trouble when it comes to meeting mortgage obligations. If this is your situation, do not procrastinate. Take action to avoid a nightmare.
About the Author
Raynor James is with FSBOAmerica.org - providing information on mortgage loans for buyers.
Trouble Meeting Your Mortgage Payments?
In the recent smoking hot real estate market, the conditions were perfect for buyers and sellers alike. Buyers were presented with unbelievably low interest rates. This, of course, meant they could borrow large amounts of money at incredibly low costs. For sellers, this abundance of cash created a tremendous sellers’ market with even unremarkable homes flying off the shelf as fast as they were listed.
The question for many during this period was whether the low interest rates and high home prices were creating the seeds of disaster for many. While times were great, what would happen when the market returned to normal parameters? Well, we are starting to find out.
If you are involved in the real estate market, you already know that home prices are pulling back and interest rates are rising. For people that purchased a home in the last year or so, this is not a good situation. They bought at the top of the market and have little equity in their property. At the same time, they borrowed money on low teaser interest rates that are now increasing to the point they can’t afford the monthly payment. Unfortunately, the pull back in home values means they often don’t have equity they can access to pay the bills.
If you are having problems meeting your mortgage obligations, the first step is not to stick your head in the ground. You need to deal with the situation or your lender will deal with you. In this case, we are talking foreclosure and booting you out of the house. If you sit on your butt and hope, you are not going to be saved. You must act.
The obvious step to take if you are in a bad situation is to sell the house. Is this an ideal choice? Probably not, but do you really have any other option? If you can price the house and pull at least some equity out of it, this option definitely beats defaulting on your loan. If you default, your credit will be a nightmare and it will be a very long time before you can qualify for a loan again.
If you have little equity in your house, you may be surprised you are actually in a better position when it comes to dealing with your lender. First and foremost, the lender does not want the house so it is very unlikely to proceed with foreclosure. Instead, the lender is going to grumble, but should agree to a forbearance agreement. This agreement cuts your mortgage payments in half or eliminates them entirely for a period of time. If you took out student loans to go to college, they were in forbearance while you were actually in school since you could not repay them. The same thing works with real estate. Taking this step can help buy your time to sell the house or come up with some alternative plan for making the payments.
The heyday of the recent hot real estate market is over. Many people are finding themselves in deep trouble when it comes to meeting mortgage obligations. If this is your situation, do not procrastinate. Take action to avoid a nightmare.
Raynor James is with FSBOAmerica.org - providing information on mortgage loans for buyers.
posted by Chris at 7:14 AM
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