Trapped in a Subprime Mortgage – hypotheques quebec
By Mark Steed
If you were one of the millions of people who were wooed by the American Dream of a home of your own, even though your credit was poor and you had no money to put down, you are probably worried about the problems that 1.5 million families faced in 2007 and an additional 2.5 are projected to face this year: foreclosure on your home – hypotheques quebec.
Easy credit was the perfect solution at one time, especially when there was no down payment required and the initial rates were fairly attractive tickler rates.
Now that home values are falling, and the reset rate on these adjustable rate loans are rising many of these homeowners are facing real problems.
Some of these mortgages could have rates approaching 10%, which translates to over $2,000 on even a modest mortgage of $200,000. Even a small adjustment in the ARM (Adjustable Rate Mortgage) could mean a $300 to $400 increase in the home loan payment. A further problem is that the homeowner can’t even try to refinance at a better rate because his credit hasn’t changed and his home value has gone down. (The mortgage balance is higher than the value of the home.)
Is there anything that a homeowner in this situation can do? Congress is trying to find ways to help homeowners out of this crisis, but on an individual basis, each homeowner faced with the possibility of not making his loan commitment should be very pro-active in addressing the problem – courtier en hypotheque.
The first thing to do is not ignore the problem. Once you know that you may not make the mortgage, contact the lender and let them know of the problem. If there has been some changed circumstance, such as illness or job loss, the bank will work with the homeowner; it may be a different story if the borrower has been squandering his money.
Contact a mortgage counselor. The Department of Housing and Urban Development can recommend a housing counselor in your area who can help you find steps to dig yourself out of the problem.
Reduce overall expenses, especially your credit card debt. There may be some expenses that you have no choice about, especially as food and energy prices are rising, but non essential items should be examined carefully. Use these savings to lower interest credit card debt and save even more.
See if you are eligible for a government assistance program. There is a new development for low income families that will allow them to switch to a 30 year fixed rate home loan (as long as they were current on their original mortgage before the ARM rate increased.)
There are some more drastic solutions, but, depending upon the circumstances, some homeowners should consider them.
Sell your home. In today’s market, that may mean a loss on the sale, but lenders have been known to consider using the proceeds of the sale as settlement of the mortgage. It is frequently a better solution for them.
Choose bankruptcy. This is a last ditch resolution since you will be hampered in terms of your long range financial plans. Your credit, already bad, will be worsened further, but if it is the only answer, you may be able to consolidate debt and even have some of it forgiven in some cases – courtier en hypotheque.
The bottom line is that the smart borrower will attempt to take steps before late reminders pile up and foreclosure is the only answer.
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