A Good Deal Of Blame Can Be Laid At The Feet Of The Homeowners Themselves

Category: Finance, Mortgages.

The more informed buyers have known for a while, yet lots have been refusing to read what it says. Part of this debt likely comes from the cost of owning a house.

Many Americans are getting deeper into debt. For a growing group of homeowners, the cost of home ownership is forcing a difficult situation into an impossible one. Earlier this year, current numbers released by the Government are showing an alarming increase in the rate of foreclosures. Creating a" foreclosure crisis" that will likely last many years more. In some areas, of all property owners who were extended sub- prime loans, the rate of default is as high as 14- 20% when 4- 6% is considered" healthy" . Sub- prime loan officers are usually experienced in extending financing to borrowers with credit problems, unable to verify income, employment or other factors that make them a poor fit for traditional financing.

This data has been all over the news- the financial market has been in upheaval. In the past few months, many major companies in the sub- prime market have sought additional investors or in some cases simply closed their doors and gone out of business. The problem doesn t stop with the sub- prime market. Just as their clients were unable to afford the escalating costs of living, many sub- prime financial companies found it impossible to absorb the foreclosure rate we are now seeing. Even traditional banks are tightening purse strings and placing more scrutiny on the loan approval process. A good deal of blame can be laid at the feet of the homeowners themselves.

This makes us wonder: how did this issue ever happen in the first place? In this age of" big is best" many home owners in America see a big home as an indicator of success. Often buyers push how much they can afford and end up in a difficult situation or worse. This pushes many buyers into trying to own a larger, more expensive home without enough thought to the affordability of one. Blame can also be laid at the feet of some financial professionals. The current debt- to- income ratios are either broken, or the types of loans that lenders are providing are poor choices. Who is better qualified to know how much debt a borrower can afford?

Loans like 28/ 2 and 27/ 3 loans with fixed teaser rates that adjust after 2 or 3 years with a balloon or margin are just a few of the loans that have created difficulties for home owners. We ve seen foreclosre problems hit most of the large regions we work including Oswego real estate, Naperville real estate, Montgomery real estate, Batavia real estate and Yorkville real estate. Of course the end result of this mess will be better qualified and better educated home owners but did things really have to go so far? Frankly, I sometimes think they did. In the mean time, if you are thinking of buying a home in the next few years, it s important that you start talking with your local REALTOR or financial professional and make sure your finances and credit scores are in order before you continue with applying for a loan. Lately it seems like it takes a relatively large shock to get some things to go right.