When Home Values Fall Homeowners Cannot Refinance

When a home owner falls behind on their mortgage their first instinct is to fight to try and stop foreclosure and get back on track. For someone who is upside down on their mortgage they may not care that they've fallen behind.

When home values fall below the debt that is owed to the mortgage lender for the house it puts the homeowner in an interesting predicament. They can continue paying a debt that is greater than the value of their home or they can try to foreclose or sell their home as a short sale. A foreclosure attorney in Schaumburg will tell you that they are seeing this far too often and sadly for some, their best solution is to foreclose.

Most of these homeowners cannot qualify to refinance because the debt they want to refinance is more than the house will appraise at. No lender will give a debtor more money then the property is worth. It is the house that secures the loan and makes it a good investment.

Interest rates are at an all time low and yet the Chicago Tribune has reported that mortgage lending is going to drop 25% in the United States next year.

Refinancing makes up a significant number of the mortgages written each year. The Chicago Tribune reported that this decrease in refinances will cause mortgage originations to fall from $1.2 trillion to $900 billion next year.

The low interest rates and decreased home prices have caused people in the position to buy a home to do so. This has caused a little increase in new home mortgages but still the industry overall will see a decline.

Combined with the fact that more people are renting and some people are not trying to stop foceclosure. A foreclosure attorney in Schaumburg will tell you to research all of your options before giving up on refinancing. Loan modification may be another solution that makes it easier to keep your home.

The mid west is still reporting a high percentage of home ownership but all Chicago suburbs are feeling the effects of a decline in property values. However it is important to remember that if your home value has decrease so has the cost of the next home you may buy. Those that are in a position to take a loss on a home sale might find they make that money back because they can save so much on the new home the purchase combined with a record low interest rate.

Talk to a foreclosure attorney in Schaumburg before you make any long term decisions and let a professional help you weigh your options.

Chang and Carlin
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