During the housing boom homeownership grew at record levels. Mortgage brokers were making loans utilizing all kinds of exotic loan programs. There were interest only adjustable rate loans, option loans were the purchaser would choose from one of 4 different payment options and 100% financing programs just to name a few. As long as home values continued to rise these types of programs may have made some sense. Unfortunately the housing market has gone through a "correction". What this means is that home values in many areas of the country have not continued with the appreciation that had been experienced in recent years. Not only had the values not appreciated but they depreciated by as much as 20% in some areas. From a purely economical perspective, the rate of appreciation could not be sustained.
Your Not Alone if You Are Having Trouble
For homeowners who utilized some of these more exotic loan programs to finance their homes the adjustable rates are increasing and making the mortgage unaffordable. Some homeowners who had less than perfect credit were able to purchase homes using sub-prime loans. Sub-prime loans generally have higher interest rates, costs and may have started with lower initial "teaser rates" which were followed by substantial increases that have now made them unaffordable. The Center for Responsible Lending estimates that there are approximately 2.2 million American households that have or will lose their homes as the monthly payments increase on these adjustable rate mortgages.
What Are The Alternatives
So what alternatives are available to homeowners faced with these escalating monthly mortgage payments. If you had not heard of it before, recently everyone has heard of foreclosure. Foreclosure is the method by which the lender takes back property that is not being paid for as agreed. A foreclosure is one of the permanent alternatives for loan relief. Some other permanent alternatives would be assumption, a short sale (short payoff) or a deed-in-lieu of foreclosure. Understand that these permanent alternatives result in the loss of your home.
There are also temporary alternatives which do not result in the loss of your home. These alternatives would include a forbearance agreement, a reinstatement, a repayment plan or possibly a loan modification.
Get Help From An Expert
Before getting to a situation where the lender has no alternative, do yourself a favor and get with a real estate expert who can help you understand your options. Remember you are not alone, but you have to take action. If you are currently behind on your mortgage or expect a problem with maintaining your mortgage Contact Mack for a free confidential consultation to discuss your exact situation and options. This service is free for any homeowner in the northeast Greater Atlanta area.
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