You have your home already. You already have your mortgage. All these subprime mortgage problems don’t have an effect on me you say. Or do they? See CNN’s story Mortgage Woes.
With all the foreclosure problems we are facing, foreclosures are anticipated to be in the range of 1,500,00 to 2,000,000. How can this not affect every American? Let’s explore exactly how this DOES affect everyone and what can we do about it so the right people are affected and not just YOU!!
Please contact your Attorney General to make the subprime lenders responsible and also take a look at the elected officials who receive thousands and sometimes millions of dollars that are donated to their political campaign. Attorney General Contact Information, Congress and Senate.
How Existing Homeowners Are Affected
According to a December 2006 report, the Center for Responsible Lending, a home will lose 1% of it’s value for every home that is foreclosed upon in your neighborhood. So your $200,000 home with lets say just 8 foreclosures in the area will lose 8% of its value.
“For subprime mortgages originated from 1998 through 2006, we project that 2.2 million U.S. households will lose their homes to foreclosure, costing these households as much as $164 billion. One out of every five (19.4 percent) subprime loans made today will fail.”
Your home that was once valued at $200,000 is now $184,000. I hope you don’t have a $200,000 mortgage on it. Depending on where you live, there are areas of the country that have whole towns in foreclosure. Just look at the pockets of massive foreclosure in Michigan, Colorado, Illinois, etc.
Are You CURRENTLY Looking For A Home, This Affects You
If you are in the market for a new home you have both advantages and disadvantages.
Advantages
Just reflecting on the aforementioned How An Existing Homeowner Is Affected, you can see as a home buyer that you are in the opposite position. Property prices are coming down because there are fewer buyers than sellers. This is what is known as a ‘homebuyers market’ and is based upon supply and demand. The supply being the existing homes for sales as well as the foreclosures and the demand being less homebuyers. You should be able to find your dream home cheaper than you could have just a few years ago.
Another advantage will be that ’some of’ the individuals that are selling could be motivated because they could be facing a foreclosure themselves. Obviously you may not know that unless you research public records. You can research foreclosure records here:
The last advantage will be that the interest rates are still very low and are comparable to a few years ago when we experienced record lows for interest rates.
Disadvantages
Here is the big reason we should all be upset. The mortgage industry has allowed many people to get a mortgage with little or absolutely no money down. Currently they are loosing millions of dollars during the foreclosure of these homes because not only is there no equity position but statistics show that it costs a lender approximately $30,000 in expenses to foreclose on a home. We will all pay for this.What does this mean? This means 3 things to everyone. The first way this can affect us is that lenders have a fiduciary relationship to their stock holders and therefore they expect a profit. Remember, the investors that buy the mortgages from the subprime mortgage companies are not very happy right now because their stocks are losing a tremendous amount of money AND have to make it up….somehow so…:
- We are currently seeing is an increase in the interest rates for the not so perfect borrowers.
- Mortgage guidelines are tightening up and the common 100% mortgage is becoming a thing of the past.
- Lower interest rates for a new mortgage is more difficult to attain today and will increasing become more and more difficult.
Looking To Sell Your Home, Your Affected As Well
If you are looking to sell your home, this may not be the best time to do that. If you are in the obvious situation that you have to sell because of employment, foreclosure or some pressing matter then you may not have a choice. If that is not your case then seriously consider if this is the right time to sell.
Our current housing market is best suited for the homebuyer vs the homeseller, simply due to the fact that there are more sellers than buyers. Another major disadvantage could be the fact that depending on where you live, property values have dropped as much as 20% over the last 18 months. If that describes you, we hope your current mortgage is less than what you owe.
How You Are Affected If You Are Looking For A Mortgage
If you are either refinancing or if you are currently looking for that dream home or investment property, buyer beware. What we once knew of the mortgage market just 30 days ago has been transformed into an industry in shambles with mortgage brokers scurrying around just to keep up with all the changes.
That is very important to you because the days of 100% loans are coming to an end quickly. Low credit score individuals and high loans are also ending as we speak. If you want to obtain your absolute best interest rates and terms then it behooves you to work with mortgage professionals that have a great reach into the mortgage investor pool. Every mortgage guideline is as unique as the homeowner looking for the loan. You can only be certain that you do in fact have the best rates and terms if you are working with a well positioned broker.
If you are in need of help and would like to reach a well respected Mortgage Professional, call the Mortgage Professional Hotline 1-888-577-8338.
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Tags: Lenders With Problems 2007, Mortgage News, Subprime Mortgage
