Foreclosures Book

Whenhousing values plummet—every bubble bursts, eventually —you can be left with negative equity. We call this an underwater or an upside-down mortgage, whichmeans that you owemore on yourmortgage than the house is worth. For example, your home might beworth $300,000, but you owe $350,000 on themortgage. A study of Homeownership Preservation Foundation data of 60,000 homeowners nationwide revealed many “tipping points” that cause homeowners to go over the edge financially. TIPPING POINTS Tipping points that put homeowners over the edge: ; ; 32% experience a job loss ; ; 25% experience a health crisis ; ; 85% have already missed one mortgage payment ; ; 50% have already missed two payments ; ; Most have no savings, no available credit, and their extended families have limited resources. ; ; Most have first-time loans, and most loans are less than three years old. ; ; They may have already refinanced two or three times. Notice in the statistics above that most of the homeowners who risk going “over the edge” have had their first-time mortgages for less than three years. According to a Freddie Mac/Roper poll of more than 2,000 U.S. homeowners, 60% of respondents wished they understood the terms and details of their mortgage better. The “legalese” of amortgage contract can be intimidating, especially for those who are new to homeownership.