http://www.articletrader.com/ Articles at ArticleTrader en-us http://www.articletrader.com/finance/real-estate/the-housing-bubble-and-its-effect-on-your-equity.html http://www.articletrader.com/finance/real-estate/the-housing-bubble-and-its-effect-on-your-equity.html Thu, 12 Apr 2007 00:00:00 -0500
There were various opinions on the reality of the bubble at all. Most real estate professionals denied its existence, while economic experts had a more realistic outlook of what would happen to the real estate market.

The Real Estate market has been on a steady decline in parts of the country. Recent CNN studies showed a year end decline of up to 17% in some cities, while other cities showed a 23% increase in property value.

Although depreciation may be good for prospective home buyers, what will happen to sellers or people who need to use their equity to fix unfavorable financial situations?

The equity in a home has always been a safe haven or backup plan if a family fell on hard times. Refinancing for cash or a home equity loan in an emergency is very available and an easy to way to get cash in an emergency or to pay off major debt.

It is suspected that a market adjustment, or correction, may be necessary. If this happens the outcome may easily affect home owners who may see their equity vanish before their very eyes. In efforts to spur the economy, if the future shows us no factors, such as a decrease in interest rates or an increase in population (buyers), a market adjustment must be made. This will in effect decrease home values even further, possibly by 10% or more. Another hit to your equity.

If you have not owned your home long enough, or did not put and money down to purchase your home, you may end up owing more than your home is worth as your home value plummets and your equity completely disappears. Refinance or home equity loans will not be an option as there is no money left to take out of your home.

It may be wise to ask your local real estate agent to do a Comparative Market Analysis to estimate your homes value. Subtract 10+% off that value to see where you stand. If you are in the safe zone if an adjustment is actually made, cash from your home may be possible.

This looks bleak for those who need financial help out of debt or crisis and are in the position to lose their equity, even more so if their credit is damaged. If you pull your equity out now to get out of debt, your home could be over mortgaged in the future.

This still may be an option for many. If you make this choice, make sure the cash from your home will solve the problem permanently and put you in a financially stable position for at least 3-5 years. Also make sure that you want to stay in this home as long as possible. You can only sell an over mortgaged home for a loss.

If this option does not suit you, you may also consider seeking Debt Consolidation Counseling from a reputable firm. Some firms are good and honest you just need to know what to look for.

I have two last resort options that may be hard to swallow, but desperate times call for desperate measures. If your home is set up for it, rent a portion of your home for extra cash to get you through tough times. And lastly, if your debt is consuming your life and your mortgage is one of the main reasons that you are having trouble, it may be time to sell while you still can, and find something more comfortable financially. Make sure to know your homes value and price it correctly. Also make sure to have time and money to hold out in a slow market.

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Trisha Dingillo is a Illinois Licensed Mortgage Broker and Financial Planner. She is the author of the site Debt Consolidation Loan Options

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/mortgage/death-of-the-sub-prime-mortgage-market.html http://www.articletrader.com/finance/mortgage/death-of-the-sub-prime-mortgage-market.html Sat, 31 Mar 2007 00:00:00 -0500
Sub prime lenders are the banks that serve borrowers with low credit scores, people with previous bankruptcy, foreclosure, other repossessions and judgments. They are the banks that offer many of the highly popular no down payment or 100% loans.

In the last few months, I have seen 4 very large productive and strong sub prime banks go out of business. It was shocking to see banks that I have used many times as a mortgage broker; banks that I know provide very good service to much of the mortgage industry closing their doors. It made me take notice and others are talking as well.

What is to happen if this phenomenon continues and these types of banks disappear completely? Only borrowers with good credit scores and a sizable down payment will be able to purchase homes. What does that mean for the rest of the country? Will hoards of people be shut out of home ownership and be chained to apartment living when its time to start their families?

One good way to combat the down payment issue is with down payment assistance. Companies like the Nehemiah Program and Ameridream will soon be utilized by many to get the down payment funding that will soon be necessary to purchase a new home, but what of the people with poor credit?

It is now more important than ever to be conscious of our credit and make sure that our credit file stays clean and scores improve or remain high, in the 650-680 range or higher. Now even more so, especially at a time where it takes two incomes to afford a home. It seems that the mistakes previously made by most Americans will have more dire consequences than ever before. Banks are becoming less and less lenient and it's time to tighten the belt, gain control of our spending, debt and credit and plan for our financial future. Your home may depend on it.

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Trisha Dingillo is a licensed Illinois mortgage broker and hopes to help people have a chance in the future to easily purchase their homes through her informative website for Bad Credit Repair

Source: http://www.articletrader.com ]]>