How to avoid mortgage loan problems
A recent report by the Mortgage Bankers Association of America shows that 4.7 percent of U.S. mortgages were delinquent at the end of 2005. Outstanding US mortgage debt stands at $9 trillion today and homeowners would do well to use a few tips to avoid mortgage trouble.
Be very careful with ARMs or interest-only loans. These types of loans let borrowers qualify for more expensive homes - but beware as rates (and payments) climb. If you can barely afford the payment on your ARM or interest-only mortgage, you are asking for trouble in a few years when the “teaser period” expires and your loan re-sets to a fixed rate. Be sure you have extra cushion in your budget with these loans. The unexpected can and does happen to millions of Americans each year. For people who live at the far edge of their means, one life event can hijack their lives and lead to defaults on bills and/or mortgage payments.
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