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Home Renters Beware: The Foreclosure Crisis Affects You as WellAugust 11, 2008
Home foreclosures have created an overlooked victim: what happens when the home you rent goes into foreclosure? The vicious circle of declining home values and rising foreclosures.
July 11, 2008
Home values drop when foreclosures rise creating a vicious circle. Is there help in sight or a way to take advantage of a declining market? Home Selling Success: What You Need to Know
July 11, 2008
Yes, the home selling market has slowed in the past year; however, houses are still being purchased on a daily basis. What is the secret to successful home selling? The Real Estate Roller Coaster and Home Value
By Karen LawsonHome Worth Columnist
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Home worth is declining in many areas. How does this impact you and your mortgage loan? The answer largely depends on how long you plan to keep your home and the terms of your mortgage. Understanding how your mortgage works and knowing home value trends in your area can help you maintain financial security.
Up, Down, Upside Down: Home Worth and Your Mortgage
If you made a down payment of 10% or more when you bought your home, and have owned your home for a few years, you've probably gained home equity. Home equity is the difference between your mortgage balance and your current home value. Unfortunately, many homebuyers have "exotic" mortgages with changing rates and terms that can negatively impact home equity. You'll want to understand the terms of your mortgage loan, and how home values are performing in your area.
Amortization and Building Home Equity
If you have a fully amortizing loan, you are paying down the balance of your mortgage with each mortgage payment. In the first years of your loan, most of your payment is applied toward interest, but as your mortgage balance decreases, you pay less interest, and more of each payment is applied to the mortgage balance. "Exotic" mortgage loans may allow for interest-only payments or negative amortization. If you are paying interest only, your mortgage balance is not going down. Negative amortization means that your payments aren't enough to pay monthly principle and interest (P & I) installments. The unpaid amount is added to your mortgage balance. This situation can be worrisome if property values are declining in your area. If your home value falls below your mortgage balance, your mortgage is said to be "upside down." If you find yourself in an "upside down" scenario, your mortgage lender may be persuaded to modify the terms of your home loan rather than foreclosing on it.
About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.