Many of us are familiar with the present dwindling economy in North America and the constant struggles to maintain GDP, and unemployment rates. Joblessness has risen to as high as 15% in 14 U.S. metro areas according to the U.S. Labour department. Nationally, 371 of 372 metro areas saw their unemployment rates rise, while one remained unchanged. The national unemployment rate rose to 8.5%, not seasonally adjusted, from 5.4% a year earlier.
However, this nagging crisis is also apparent in other parts of the world – According to Financial Services Authority (NYSEARCA:FSA), England now has 92% increase in the amount of homes repossessed. A total of 29,516 mortgage possession orders were issued in England and Wales on a seasonally adjusted basis - a steep increase of 4% on last quarter. Even more alarmingly, the third quarter of 2008 has revealed a 24% increase compared with the third quarter of 2007.
A lot of investors like myself have been quietly keeping an eye on companies such as FRE and FNM due to their cheap prices per share and potential upside, however do not expect them to rise or bounce back anytime soon. It may take a couple of months or years to get the housing market back on its feet again.
Just to tally up the facts and figures in a more orderly fashion, approximately 13,161 homes were repossessed by lenders in the third quarter of 2008. Now picture yourself having recently graduated, moving into a home, and all of the sudden having a bank or government rep. showing up at your door. This is the sad truth that a lot of families are facing around the world.
These new reports are a cause for concern within a difficult year for the housing market. The credit crunch continues to make lenders hesitant to grant mortgages, while the ever present effects of rising household bills and mortgage costs hit households across the United Kingdom and the rest of the world.
Tips on avoiding mortgage problems
If you choose to end up with fixed term mortgage, then you will be put on the lender standard variable rate which differs as per the package chosen. The homeowners selecting the cheap fixed rate then speak with the mortgage broker about the best deal available. Make sure that you are paying a reasonable interest rate for getting the large sum of money. Generally, the remortgage is a process of paying the first mortgage by obtaining a new debt using the same property as collateral security. It is one of the popular terms used in UK and most of the clients adheres it.
Incase, if the customer have repayment loan and pursue to change into interest only mortgage then the customer will be paying the interest only and the balance remains to be same. In interest only product, the customer will have to find some other way of paying the debt. Here, the outstanding balance won’t be reduced but the interest will be paid regularly. Interest only is a best process where the borrower wants to broaden the borrowing capacity.
Incase, if the customer have equity built up, then he can use that to pay the monthly loan. In this option, the monthly credit payment will also be getting increased. When the entire equity is used to make overpayment, then it helps to reduce the payments.
Spare cash can be used to reduce the debt balance. Making spare cash helps to maximize the amount of capital in the property. The overpayments options help to reduce the amount of interest to be paid and lessen the period of paying the overall debt.
Discuss with lender
The customer can have discussion with the lender regarding payment and payment schedules. People can initiate their difficulties and communicate to make things possible.