November 28, 2007

Foreclosures still continues

This year 2007 has been a terrible year for a lot of homeowners who have no choice but to have their homes go into foreclosures. This is not an easy situation for anyone to handle, to have a home go into foreclosure, or worse go into auction. One of the many possible reason why a home ended up in foreclosure is the flactuating interest rate of a homeowners mortgage loan. If a homeowner availed a variable rate loan when they bought their house, this rate would either go up or go down, in other words, the monthly house payments could also either go up and down as well. And the years 2006-2007, the interest rates have been going up and up most of the time, and a lot of the homeowners who bought houses using variable rates loan are largely affected by these flactuating rates. And with the climbing interest rates, monthly payments are going higher and some couldnt possibly afford the monthly payment changes, that affects their capability to pay on time and pay the above minimum of what is due per month. And most lenders, after few months of deliquency in paying the mortgage loan will result in home foreclosures.

The year 2006-2007 have been a record breaking numbers of homes in foreclosure, and prices of homes for sale are dropping as well. This situation generally means that there are a lot of housing inventories in the market. More housing inventories than what is in demand, meaning more inventories than buyers, results in price drop of houses, which is not good in the part of the sellers. This is also what is commonly called a Buyers Market, where individuals or investors who would like to buy a house can possibly get a house cheaper than what a house was previously priced or assessed.

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