Mortgage Crisis
Mortgage Crisis
How are regular everyday people being affected by the current crisis in the mortgage and financial industry?
How will this mortgage environment change my life? What can I expect to happen if I am a homeowner with a “adjustable rate” or a subprime loan? What is the credit crunch? How does this all affect me and my family?
These and many questions like these are the talk of many people who only a few months ago might not have known a “subprime loan” if it walked up and shook their hand. When we get down to it, it’s the affect on the average person that is important. So what if some company that had made millions of dollars only a few years ago was now shutting it’s doors or declaring bankruptcy? So what does it mean to me? Well it may mean a great deal to you in more ways than you can imagine.
Let me start with a basic question, How many of you brought a home in the last two or three years or refinanced your home in the last two or three years? Okay so that’s almost everyone in the room. Now how many of you can tell me what type of mortgage product you received. Is it a fixed rate for 30 years or is it an adjustable rate? What is the margin and index if it’s an adjustable rate? When is the next adjustment period? Is it interest only or a payment choice arm (negative amortization) loan? Do you know what negative amortization is? On what basis did the loan officer you worked with qualify you? I could go on with these questions but the bottom line is if you cannot answer most of these questions about your mortgage then you very well may be in a dire situation. At the very least you need to have a mortgage checkup from your preferred loan officer. Maybe you need to get a second opinion as well if that loan officer didn’t explain these things to you in the beginning.
Here are some additional questions you need to be asking yourself. What is going on with the property values in my neighborhood, are they going up or are they stagnant or are they declining? Why is that important you say? Well, if you have an adjustable rate mortgage and you need to refinance you may not be able to? Why? Because of the declining value of your property, and the increasingly tight restrictions by lenders on those who wish to borrow.
Now you see how this new mortgage environment is going to have an affect on you as a home owner. If you are going to need to refinance your mortgage because the rate is about to adjust and the value is not there or the guidelines or program you used to qualify is no longer the same, you may not qualify. Your property may not appraise for enough for you to get refinanced, or the company you did your loan with may not be in business today. Are you prepared if your mortgage payments are going to rise due to the increase in interest rate? What is the plan?
Just like once a year you do a physical checkup, it may be time for you to do a financial check up. Have you called your loan officer, lately?
Michael D. Cook, Sr. is a mortgage a mortgage originator with over 15 years experience in the industry. He has a reputation for educating his clients so they make the best choices about the financing for their personal needs. More than that, he has resources to assist those with credit and income issues to begin to position themselves for home ownership. Michael believes we have too much debt in our country and has joined the crusade to stamp out financial illiteracy