Upside Down Mortgage

Posts Tagged ‘bad credit’

I am a single mother of two and get no child support. I am forever fighting with loss mitigation to avoid foreclosure, and I am aging years at a time with all the stress maintaining my household involves.I put no money down and even with the slow market, if I sell my house I will make a profit - I think. I have been an owner for four years and I don't think I am upside down but you never know. Different Realtors give me different quotes. I am just scared about losing my home and not having anywhere to go to. I filed bankruptcy that was final not so long ago so my credit is not looking pretty. So if I sell my house, I will have to rent. I know that renting will be much cheaper but what about my credit. Things are very confusing to me and different people seem to give me different ideas of what to do and what is going on.

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It is important who your mortgage loan lender is. There are many predatory lenders and many companies that charge very high interest rates. FHA loans have been helping people become homeowners since 1934.If you can get an FHA loan, then it is a wise thing to do because the FHA is part of HUD and the government has been trying to help homeowners lately. That does not mean you cannot be upside down with an FHA loan. There are many homeowners with upside down FHA loans.

Understanding FHA home loans

The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal. This has helped many people own a home who would not have otherwise been able to. They can get:

• Low down payments
• Low closing costs
• Easy credit qualifying

Bear in mind that not all lenders are FHA lenders. In fact, most of the lenders are not so you will have to go out of your way to find an FHA lender but if you can find one, then it is very much worth your time.

There are also different types of insurance such as:

• Title I - Property Improvement
• Title II - Mortgage Programs
• Servicer-Originator Type:     Single Family Servicer-Originator only
• Multi Family Servicer-Originator only
• SF and MF Servicer-Originator
• Single Family Originator only
• Multi Family Originator only
• SF and MF Originator

The foreclosure rate has been rising for quite a while now. With more job losses and homeowners falling behind on mortgage payments, there are more people upside down on their mortgages. On Thursday May 28th, the Mortgage Bankers Association said that a record 12 percent of homeowners with a mortgage were behind on their payments in the first quarter of this year, 2009. While the unemployment rate may hold steady, there are already too many people out of jobs and have no way to pay their mortgages.

The Subprime Crisis

It was not long ago when the real estate market was booming. But then the subprime lending crisis hit the market and everything changed. At that time borrowers with bad credit were able to borrow a lot of money because of the homes they were buying. However, soon they saw their home values dropping unexpectedly. Many of them ended up in foreclosure. Today, about 50% of homeowners with subprime, risky adjustable rate loans have defaulted on their loans or they are already in foreclosure. In some states, the problem is worse than others.

The Prime Crisis

With a lot of subprime borrowers defaulting all at once, the values of homes fell more and more and a lot of lenders were forced out of business. The problem became so severe that the government had to step in and rescued many lenders and financial institutions. As companies are forced to downsize in order to avoid having to file for bankruptcy protection, they lay off workers. With the jobless claims rising, more and more people cannot afford to pay their mortgage payments even when they have good fixed rate, traditional mortgages and they also have good credit.

Foreclosure and Upside Down Mortgage

The problem is spreading even if the jobless claim number has fallen recently and new home sales number is encouraging. The number of people without jobs are still high and some of them are holding onto their homes but they will not be able to hold on much longer if they cannot find jobs soon. They will eventually be foreclosed on. If their interest rates rise and they cannot refinance, added to the fact that home values probably will not rise so soon, they are going to find themselves in an upside down mortgage situation.