Originally Posted by on http://SummitToday.com
As a Realtor in the Summit, NJ area, I recently received a call from a homeowner that was interested in selling his home because he could no longer afford it. He purchased the property in 2004 with no money down and refinanced it a year later for $40,000.00 more than what he paid for it. Last week, I performed a Comparable Market Analyses (CMA) for him and determined that he now owes more than his home is worth. If he were to sell his home today, he would not only have to come up with enough money to pay off his mortgage, but also to pay for costs associated with listing the property. He is one of many homeowners that are heading for foreclosure.
Over the last several years, it was easy to obtain a mortgage. We hear on a daily basis about the increase in the number of foreclosures, and about the subprime lending issue that has put many homeowners in a state of financial disarray. According to a recent report, the national foreclosure rate is one in every 501 households. The majority of these foreclosures are the result of subprime adjustable rate loans or teaser rates that are about to reset. When the resetting occurs, the loans become unaffordable and the buyer must either try to sell, refinance, or eventually ends up defaulting on the loan.
Today's market requires homeowners to know the value of their home before they take additional loans against it. It is too risky to refinance your home, or take equity lines that exceed the value of your property. Homeowners can find out the value of their home by asking a local realtor for a CMA or by getting a professional appraisal done. I advise buyers when seeking financing to completely understand the terms of their mortgage and to work with a consultant that they can trust. If you do not know anyone in the mortgage business, ask your real estate agent to recommend one.
Posted by Thomas Della Piazza, Sales Associate. Coldwell Banker Realtors, Summit NJ TommyDP@verizon.net