Mortgage and Real Estate Blog

One of the biggest problems within the broad category of “mortgage crisis” is the fact that there are so many home owners out there who were lured in with the promise of affordable home ownership despite the fact that it would be impossible for them to make the payments once the interest only portion of repayment was over. Right up alongside that is the fact that there were adjustable rate mortgages that had rate spikes that were huge and impossible to manage and that made the home owners’ ability to pay a laughable concept.

If you find yourself in a position in which your adjustable rate mortgage payments sky-rocketed and you had no idea that the rates could - let alone would - jump that high, you might want to look into a mortgage audit that could identify whether or not your loan is even legal.

A number of the adjustable rate mortgages that were issued by predatory lenders are not even legal. If you’re in a position in which your loan has become completely unmanageable and you had no idea that the payments would jump so much, you owe it to yourself to see what you can do to get back to being the one in control.

There are plenty of people who, a few years back, found themselves thinking that adjustable rate mortgages were the ticket to their success: with an adjustable rate mortgage, after all, they found that they were going to be able to get into a home of their own and were focused on the fact that, by the time their mortgage reset, the overall interest rates associated with home loans would improve. The challenge is that, in many cases, all the talk was about rates dropping when, in reality, they went through the roof.

That’s a big part of what caused the mortgage crisis and an increase in foreclosures: when the rates on adjustable rate mortgages started to climb, home owners could no longer afford to make their monthly payments - worse still, many of them didn’t realize that there were actions that they could take that would have helped them to get out from under the strain of higher costs. Loan modification may have been the thing that they were looking for all along.

Loan modification allows mortgages to be renegotiated with a lower interest rate - typically a fixed rate over an extended term - and lower monthly payments; it will create a great outlet for those who need to get out from under their ARMs.

One of the biggest problems faced by homeowners who are affected by the mortgage crisis is simple: the payments that they owe on their adjustable rate mortgages have ballooned -going from manageable to completely through the roof. What you are going to find when you start taking a closer look at the mortgage payments that you need to make is that there’s a good chance that you will be able to take advantage of a mortgage audit.

If you have a ballooning adjustable rate mortgage, one of the things that you are going to want to be sure of is that everything was clear up front. You’re going to want to be sure that you are focusing on the paperwork that you have, the way the language of the loan has been written and other factors; if your adjustable rate mortgage payments have gone through the roof, what you are going to find is that there is a good chance that your payments can be reduced or that other chances can be made.

In other words, if you are concerned about your adjustable rate mortgage, make an effort to look into a mortgage audit; what may be found could be the solution you’ve been hoping for.

Legislation has been sitting in the Senate while Senators and Congressmen enjoyed the Fourth of July holidays off. The legislation would make it impossible to foreclose upon homeowners who can’t pay their mortgage? Should this legislation pass?

Frankly, no. If you take out a mortgage and then can’t pay then foreclosure is a necessary consequence. It protects the institution that granted you the loan for the home. You don’t actually own the home until it’s paid for. When you take out mortgage, you are assuming financial responsibility. If you can’t handle that responsibility then it should be given to someone else. That sad and sounds harsh, but it’s true. Legislators should not intervene. Doing so will hurt the economy even more than not doing anything at all.

Wachovia is back in the news as the latest mortgage company to stop offering negative amortizing loans. The Pick-a-Pay program that Wachovia was well known to offer to mortgage shoppers for new home loans is being discontinued.

This is long overdue. These loans have not been good to consumers and have resulted in an increase in foreclosures and homes going back to the lenders. That’s not just bad for home owners and the lenders. It’s bad for the economy.

Mortgage lenders are wising up to the fact that they’ve created their own failures and now it looks like the tide is about to turn in favor of common sense again.

(Source) A few mortgages have a flat rates of interest. This signifies that the initial rate of interest you see stays steady during the entire life of the mortgage. This gets rid of uninvited surprises whenever the market rate of interest abruptly increases. A lot of families budget for the first payment sum then are caught short when rates of interest ascend. A flat rate prevents this.

This is a good argument for avoiding adjustable rate mortgages and sticking to the flat rate variety. If the economy turns, and it will at some point, then you don’t have to worry about getting hit with skyrocketing mortgage payments. This is especially important if you have a fixed income.

Adjustable rate mortgages are nice if you are capable of paying down your interest and paying off the mortgage early. But you’ve got to have a healthy amount of capital available to do that. Otherwise, you are just riding the waves of the economic ocean where big ships and small boats alike can capsize on tsunamis and out of control tides. Even one small mishap can set you back for years. You have to ask yourself if you capable of handling the risk. For most people, it isn’t advisable.

It hasn’t been that long since the S&L scandal. What, 20, 25 years?

It looks like we might be in for another long ride with financial institutions. Another CEO just bit the dust. Ken Thompson of Wachovia Corp.

Homeowners who bought into the ARM sales pitch in the 1990s are starting to regret it now. Foreclosure after foreclosure has hit the rack and many homeowners are find themselves with higher and higher mortgage payments. The banks don’t want the houses. They want their money. But that’s what the homeowners have a tougher and tougher time coming up with. And with rising gas prices taking their tolls on SUV drivers, those homeowners are having an even tougher time with those ARMs.

Adjustable Rate Mortgages sound good today - or they did in the 1990s when interest rates and home prices were down - but you have to really think ahead on them. There is a downside as many homeowners are now starting to find. And if you don’t have the cash reserve to handle rising mortgage payments in the tough times then you’d better stay away from them. Otherwise, you may find yourself like many homeowners and facing foreclosure. Just be glad you aren’t Ken Thompson.