There has been a lot of focus on subprime mortgages over the last several months. So much attention has been cast that even congress has stepped in to make things right. But I recently had the chance to sit down with someone in the industry who has the job of dealing with the troubled situations and he told me that the majority of foreclosures that he is dealing with now are NOT subprime.
The more I thought at about the foreclosure rate and the more I thought about consumer debt in the United States then the more I came to realize that the problem isn’t in the lending industry, but is more likely in the borrowers. Here are some tips to help YOU avoid the foreclosure trap.
1. Always borrow less than you can afford to borrow. By keeping your debt to income ratio a low number you will be able to afford those unexpected situations that often come up when you are just living your life.
2. Always borrow less than the property is worth. There is no way to guarantee that the housing market will remain high, so keep your borrowed amount to at least 80% of the current market value.
3. Always buy with the intent to sale. Keep your eyes on the location, the amenities and the other characteristics that make it possible to sale a home. Things change, even when you don’t plan for them to change, and having a strong location will help you sale if you have to sale.
4. Always treat the home like you plan to live there for generations. Maintenance of the home will help hold its value and will help keep down costly repairs.
There is so much you can do to help keep your home from falling into foreclosure. Keep in mind that it is not just the subprime mortgages that are running into problems. Everyone that has bit off more than they can chew are finding that the mortgage industry is now chewing them up and spitting them out.