Elder Perry talked a lot about debt and not getting yourself in over your head.  He also spoke about only purchasing a home that you can afford according to your income not according to your neighbors home across the street.  This really struck home since I have the opportunity to help so many people obtain mortgages on a regular basis.  It also caused me to reflect on the current mortgage industry, credit crunch, and the economy that we now live in.

One of the biggest reasons we are facing hard economic times and seeing all of the big banks and mortgage lenders go out of business is because of people who want to purchase a much bigger home than they can afford with their current income.  Have you ever heard of interest-only loans or adjustable rate mortgages?  I’m sure you have and I’m sure you probably know that they are pretty much obselete as of the beginning of the mortgage meltdown.  Most interest only loans and adjustable rate mortgages were used by individuals and families who could not afford the home that they wanted to purchase.  So, they made the terrible decision to obtain one of these loans and it ended up being detrimental to their personal finances, most times ending in foreclosure because they could not afford the payments.

For anyone looking at purchasing a home in the near future, I urge you to only look and consider homes that are within your income range.  No one wants to be “house poor” and no one wants to get in trouble and risk the possibility of losing their home.

Please contact us right now so we can pre-qualify you for a mortgage so you know exactly how much home you can afford.

ShareThis

More than 770,000 homes have been repossessed by lenders since August 2007, when the credit crunch took hold.

Foreclosure filings of all kinds, including notices of defaults, notices of auctions and bank repossessions, grew 12% in August over July, and 27% compared with August 2007.

The 27% jump over last August represents a more modest year-over-year increase than in previous months, but that’s only because the housing crisis was already underway in August 2007, which saw a big spike in foreclosures.

States including Nevada once again had the highest rate of filings in the nation. One of every 91 households, or 11,706 families, received a foreclosure notice of some kind during the month, and more than 4,000 others lost their homes.

More than 101,000 Californians received foreclosure notices, which comes to about one in every 130 households, while more than 33,000 people there lost their homes. Arizona had the third-highest rate with one out of every 182 households in default.

All of these states saw tremendous home price run-ups during the boom, which meant that many buyers had to use exotic, risky loans in order to be able to afford a home. These mortgages include subprime, hybrid adjustable rate mortgages (ARMs) that feature two or three years of low introductory rates before the loans reset to higher, often unaffordable levels and cause borrowers to default.

In some of the other hard hit states, such as Michigan (which had one filing for every 332 households) and Ohio (one filing per 444 households), which never saw a housing boom, delinquencies are being driven by fundamental economic woes like unemployment, rather than pricey real estate.

Eight of the top 10 worst performing metro areas were in California. Stockton, in the Central Valley, had the highest rate in the nation with one in every 50 households receiving a foreclosure filing during the month.

ShareThis