Hypotheque taux - The Low Down on Down Payments
By Mark Steed
The loose credit of the early part of this century is haunting us as millions people with poor credit were offered mortgages and at this point millions of them have faced or will be facing foreclosure.
This seemed like a wonderful way to own a home, especially when they were offered with no down payments, and seemingly attractive rates, even if they were going to be adjusted periodically.
Now that home prices are falling, and the reset rate on these adjustable rate mortgages are rising many of these homeowners are facing big problems.
Rates on these loans could be as high as 10% when prime mortgages were available at less than 6%, frequently resulting in mortgage payments of over $2,000 on even small homes. Every small adjustment in the ARM (Adjustable Rate Mortgage) could result in a $300 to $400 increase in the home loan payment. The Catch-22? Refinancing at better rates and terms is near impossible due to a poor credit rating and upside down loans. (The mortgage balance is higher than the value of the home.)
Is there anything that a homeowner with this problem can do? Congress is looking into ways to help homeowners out of this crisis, but on an individual basis, each homeowner faced with the possibility of not making his loan payment should be very pro-active in addressing the problem – courtier en hypotheque.
Ignoring the issue is one of the worst things to do. Once you realize that you may not make the mortgage, contact your lender and let them know of the problem. Often, especially if there has been a change in circumstances, such as loss of a job or an illness, the bank will work out a payment plan.
Use a mortgage counselor. There are counselors who have been chosen by the Department of Housing and Urban Development to work with consumers to advise them in these circumstances.
Reduce your expenses, especially any credit card debt. You may not be able to reduce energy and food expenses, but now is not the time for the cell phone plan with a phone for each member of the family, or the premium high density television package from your cable provider. What is saved can be used to lower high interest rate debt, such as credit cards – hypotheques quebec.
Find out if you may be eligible for government assistance. Some low income families who were current on their mortgage before their ARMs rate reset, can qualify for a 30 year fixed rate mortgages insured by the government.
Some other solutions are more drastic, but may be better than foreclosure.
Get rid of the house. In today’s market, that may mean a loss altogether, but lenders have been known to consider taking the proceeds of the sale as settlement of the mortgage. It is frequently a better solution for the lender.
Go into bankruptcy. This last solution is the least attractive, since it will have a negative effect on your life for many years. It will further injure your already poor credit, but if you have no other solution, it is a way to have debt consolidated, reduced and in some cases even forgiven, depending on your income.
Solutions do exist, but not if the homeowner waits for the answers to come to him. Aggressively addressing the issue may be the only way to avoid losing your home to foreclosure.
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