Mortgage Meltdown

There has been a lot of controversy about the mortgage industry that is finally being brought out into the open today. The highlight of the collapse in the mortgage market has been from the adjustable rate mortgages that were sadly obtained by many unsuspecting Americans in the past years.

The adjustable rate mortgages start out really great because the interest starts very low. As time goes by the interest on those loans start to get much higher. This will then change the cost of your mortgage and has made it even impossible for home owners to make their monthly payments, which has caused many families to default on their loans. This could have been avoided by mortgage brokers simply explaining the risks of getting this type of a loan.
Many people who defaulted on their loans stated that they did not understand the risk and had they known they would have thought about their decision more carefully.

These defaulted loans have made things more difficult for people that want to obtain a loan to purchase a home. The interest rates have gone up, and the acceptable credit score range for purchase has also gone up. They also look at your credit history and your monthly income to see if you qualify. In other words they want to make sure that you can afford your monthly mortgage payments. The safest thing for people to do when purchasing a home is to go for the fixed rate mortgages. That is the only way your payments will stay the same. I still believe in no down payment loans, if you can still find one out there.

I purchased my home without a down payment and that worked out great for me. If you can afford a down payment that is also great, because it will bring your payments down. The adjustable rate mortgages are really for people that are not planning to live in the homes for long or that are planning to flip the house, which basically means renovate it and then sell it fast. Whatever you choose you need to read up on the market, save some reserve money and most of all be prepared.