Mortgage payment problem increases when home owners are faced with financial difficulties. A slowdown in the real estate market is seeing home prices dropping in many regions.
The recent drop in real-estate values is sending homeowners to the poor house. A recent Vancouver Sun article "Bankruptcies climb in B.C." high-lighted the blight of many home owners who are in financial difficulties.
Mortgage Delinquency
There is a close link between house prices and mortgage delinquency rates. Most delinquencies and foreclosures are often precipitated by life events such as the loss of employment, illness and divorce. However, the amount of equity in a home affects the ability or willingness of a homeowner to keep current on his or her mortgage payment. This is especially true for home buyers who bought in recent years, after a huge run up in home prices, and whose mortgages were secured with little or no down payment.
Maxed Out
These home owners have no flexibility to tap into the equity in the house to weather the financial difficulties. For borrowers who are able to afford their loans, they will have to cut back on their lifestyle expenses, or try to earn more income to cover their expenses.
In Canada, walking away from a mortgage loan obligation may not be an option for a home owner. Canadian mortgages are recourse loans that the mortgage lenders can continue to persue to recover the losses from borrowers even after the homes have been foreclosed. Click here to view a Global BC video segment on BC Real Estate Foreclosures Explode!
Second Mortgage Financing
If you have some equity in your home, you may be qualified for a loan. Generally, if the additional loan plus your first mortgage is less than 80% of your home value, you may be able to tap into your home for the money you need.
If you are in need of money, and your bank is not able to help, you can contact me at 604-721-4817 for a discussion. If you have the equity getting the money through second mortgage financing can be done in a matter of a few days.
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