Thursday, February 7, 2008
Troubled homeowners: Can't pay? Just walk away...
Let's use are imagination and assume the following facts were actually "reality": 1) Property values are droping at the fastest rate in modern history. 2) As more and more ARMS (adjustable rate mortgages) begin to reset, monthly mortgage payments are spiraling out of control. 3) The end is no where in sight. Assuming these facts, what should a troubled homeowner who can't pay her mortgage payments do? According to CNN Money, Just walk away... Great article in yesterday's CNN Money. I highly recommend you read it. In a nutshell, even though a foreclosure will destroy a person's credit record, trying to pay off a loan they can't afford could be worse for a borrower if it leads to bankruptcy.
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2 comments:
Yes. They are better off walking away. That's what the banks get for being 'loose.' We are going into territory that this country is never seen or seen anything even remotly like it. And just to let you know... Monetary and/or fiscal policy will not solve it.
Great find by the way, That was a great article.
Increased Federal Loan Limits Lower Price Tag on Hundreds of Thousands of Loans
One immediate benefit of The Economic Stimulus Act of 2008 is the increase in loan limits for high-cost areas of the country. By raising the Federal Housing Administration’s loan limits on what qualifies for lower-cost FHA, Fannie Mae and Freddie Mac loans, the bill could help a quarter of a million families purchase or refinance their homes at a lower cost. Combined with record low interest rates, the change could improve the financial picture for many now facing foreclosure. The options and loan ceilings vary, however, from county to county and only a Certified Mortgage Planner can weigh all the options to determine if a new loan makes sense for an individual homeowner.
The increase is only temporary, however, so homeowners looking to shed the premium they pay for subprime or jumbo loans required to live in their state need to act quickly to take advantage of these federally-guaranteed loans.
FHA loan limits that will range from $271,050 to $729,750 with the largest loans available in high-cost metropolitan areas such as New York, Los Angeles, San Francisco and Washington, D.C. But even smaller markets could see increased activity in the housing market when the new loans become available.
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