Foreclosure Crisis

You’ve heard about it – we all have. We’ve seen the news footage and all of the “For Sale” and “For Rent” signs. Could you be next?

It’s perfectly clear that there is a foreclosure crisis as nearly 2.2 million Americans can lose their homes due to substandard credit scores because over the next few years “exploding interest rates” and “balloon payments” are about to come due making this current foreclosure crisis seem very much like the Great Depression. California will be one of the most hit due to its overwhelming “subprime” borrower numbers. With the deflation of the home market selling their homes has become near impossible so they are left without much choice but to foreclosure.

I mentioned the two main contributing factors to this foreclosure crisis. The human element not withstanding of course as usually you are to blame for your own over spending. But besides that what are these other two components to the foreclosure crisis?

The foreclosure crisis can partly be blamed on balloon payments which are a way for many homeowners to keep their mortgage payments down. What this means is that once you enter into the loan agreement you have one large lump sum to pay off at the end of the agreement. In most cases it’s a 30 year balloon payment. This can leave many people destitute and having to file bankruptcy, sell their home or foreclose hence adding to the already prevalent foreclosure crisis.

Subprime mortgage rates are the main reason why the foreclosure crisis is what it is today. It contributes to the foreclosure crisis by use of an “exploding interest rate”. People enter into these types of loans not because they are in debt now or have bad credit but because they want to ass a garage onto the house or pay off tuition. The rates are but the trap, however, is maxing out your credit cards or buying a new car. Once the two year period is up the rate explodes exponentially and your bills double or triple.

This foreclosure crisis saw that the average was a mere fraction but now is nearly 1/4th of the loan purchasers proving without a doubt that the foreclosure crisis is here with us and is strong. There are many people awaiting to become a member in the foreclosure club of America and contributing to the already hellish foreclosure crisis.

Unfortunately the foreclosure crisis is coming to a head. There will be more unhappy owners succumbing to the foreclosure crisis than ever in history. To avoid the foreclosure is not easy as loan are simple, but keep in mind what the foreclosure crisis can mean for you.

If a subprime mortgage appeals to you then prepare for that large jump in percentage rates. Don’t fall into the trap that most people do. Don’t become just another number in this foreclosure crisis. Pay your bills on time and don’t purchase anything you can’t take care of. Foreclosure crisis is no laughing matter.