Foreclosures on the Rise

Well you heard it here first in one of my recent postings, foreclosures are on the rise nationwide. This news comes as no shocker to those in the know. Pretty soon foreclosure rates will reach historic levels and Florida is leading the pack with 14% of the country's new foreclosures in 2005. New York, meanwhile, has had a 141% increase in the amount of foreclosures from the 1st quarter of 2005 til the last quarter of the year. This news is pretty frightening for existing homeowners who bought within the last 5 years with some of the more interesting loan products such as interest only loans. They will be in for a rude awakening when the payment resets itself so that the loan can start being amortized. Most of these mortgage payments will jump up at least $500 per month which can really takes it toll on the homeowner's ability to make timely payments. My advice to those homeowners holding adjustable rate mortgages and interest only mortgages is to either refinance into a plain vanilla fixed rate mortgage or sell your home while prices are still high enough to be able to bail out without owing the bank money. It's time to take a deep breath and watch which way the wind blows.