Sub-prime Mortgage Holders Gambling on Price Escalation and Employment
Low credit standards for homeowners encourages risky investments that are especially bothersome in times of extreme price volatility. Excessive risk-taking by some those desiring on owning a home or just getting involved in real estate price appreciation speculation who are just getting by financially and stretching their grasp by way of home ownership are at risk with property tax escalation, sales taxes, heating fuel and increased cost of living expenses.
Not only that but also job layoffs or any financial disruption for the sub-prime borrower is usually a lethal blow. They most often have no deep reservoirs of savings or other financial accounts or money hidden away to lean on. If housing values decline by a significant margin and the borrower defaults, the lender is left holding real estate that is worth considerably less.
Many states are tightening loan rules. Mortgage lenders on the top of the pyramid find they need avoid high-risk loans.
The great gamble on part of the homeowners is to use the large run up in real estate prices in recent years - this allows homeowners to use their equity to refinance at a fixed interest rate. Click here to get home valuations or sell house by owner information or even free house floor plans
High foreclosure rates are linked to employment issues historically. Regional and state economic conditions vary. California's economy is booming and job creation is propping up much of the sub-prime mortgages in the area. On the other hand, Indiana, Michigan and Ohio have experience a foreclosure rate twice that of California because of auto related industry layoffs.
Related Tags: bad credit, real estate, mortgages, floor plans, sell house, sub-prime
Author Bio: George Evers is a published author and writes for a variety of internet sites, magazines and newscasts as well as for http://one-ifbyland.com/
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