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by 4dollars15cents from Clayton County, Ga

Last Post 84 days, 3 hours Ago


Georgia's Foreclosures: Homeowners Nightmare
Jan 27, 2008 | 10:02 AM
Category: News
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The growing number of foreclosures in Georgia is really beginning to show how much education homeowners need to have before purchasing a home. 

And I'm not saying this is be facetious.  But a lot of times, people will buy more property than they can afford.  And in other times, a lot of homeowners do not really do their "home"work, when it comes to understanding the difference between an ARM (Adjustable Rate Mortgage) and a Fixed Mortgage. 

I'm willing to bet that a lot of those foreclosures have an ARM attached to them.  And it's that ARM that is pulling those homeowner's finances down the drain.  So, what's the different between an Adjustable Rate Mortgage and a Fixed Mortgage?

Well, without getting into all of the specifics, let's define those mortgages by the needs and wants of the consumer. 

If you plan on getting a home, whether new or old, but you don't plan on staying at that residence for a long period of time, then it's perfectly understandable to get a mortgage loan with an Adjustable Rate Mortgage.   The only catch is, your payments may or may not, work in your favor, depending on other factors that will make the rate go up or down.  But what do you care? You're about to sell the home and get a little something out of it. 

However, if you set all of your money aside and saved up to buy the "perfect" house, this is your dream home, you love the neighborhood and you are completely content  and you don't plan on moving any time soon;  well then, getting an Adjustable Rate Mortgage would be the biggest mistake that you could ever dream possible.  But why it that?

Well, only Fixed Rate Mortgages are designed for "fixed" homeowners.  That's why it's called  a fixed rate.  The only way to change that rate is to refinance.  However, having a fixed rate doesn't always keep your mortgage the same.  But at least, you can still plan your finances around it.  

The one thing that homeowners have to always keep an eye one, whether they have an ARM or a Fixed Rate Mortgage, is their property taxes.  This unexpecting devil will always rear its ugly head and cause homeowners to pay out more than they had planned.  But there again, homeowners need to be more educated about their property taxes.  And to do that, always get an Escrow Account with your mortgage and keep an eye on it.  

Escrow Accounts are designed to help pay for the taxes and insurance on your home.  But did you know that you can add money to your Escrow Account?  A lot of times, taxes will go up and really catch homeowners off guard.  So, it's always a good idea to talk with your mortgage lender about putting some extra funds into Escrow to cover the "oops" and "ah, man!"  of higher property taxes.   By federal law, once your taxes are paid, any monies left over is a refund.  It's coming back to you. 

And speaking of refunds, that's probably the money that you would want to use to put a little something into Escrow.  But what ever you do, become knowledgable and remain knowledgable about being a homeowner.  It's a wonderful feeling, but if you're not up on all of the odds and ends of the deal, then you've already cracked your foundation, financially.

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thatlisagirl read my blog view my photos
Jan 28, 2008 | 7:40 PM

I agree. That is why I get aggrivated when I see that quicken commercial about the 500k mortgage for under $700 a month or something. They never say in the same commercial that its adjustable and after the first 6 months, it adjusts monthly with no ceiling.

I used to have an ARM, but it was back in the late 90's when the rates were low and there was a variance and couldnt advance or decrease more than 1% and it really helped get the balance down. One year, I was paying 2% and I loved that, but I went to a fixed when I could and am there now.

There are alot of brokers out there who are just interesting in closing the loan and dont really bother to educate their client so they understand good and bad of whatever mortgage they get. That is why the state had attempted to pass the law against predatory lending, and that was also the brief period when nobody could get a mortgage loan in GA
because all of the lenders stalled to get the reaction they wanted....and its on the news.
scooterdog read my blog
Jan 29, 2008 | 2:46 PM

Okay, so some people may not be knowledgable on home finances, but it doesn't take a genius to know that you can't afford a house selling for 3 to 4 times what your salary is, especially if you don't have a down payment. And I bet the majority of people in these types of homes and are in the process of loosing them, also drive hugh high priced SUV's or luxary cars, buy the best clothes for their kids to keep up with the Jones, and pay minimum payments on their credit cards. I'm not saying this is the case in every situation, but during my time working with consumer counseling, I had a hard time feeling sorry for some of these people. They were not uneducated people, so I found it difficult to understand why they would put themselves in that position. Bottom line, the majority of people who are in this situation, did so because they wanted to live above their means.
4dollars15cents read my blog
Jan 30, 2008 | 3:57 PM

Well, Scooter,

I'm sure that it doesn't take a rocket scientist to know that these people were trying to live above their means. However, at the same time, greedy lenders will sit these people down and make them feel that they can afford just about anything. And that's really where the problems begins. "BUYER BEWARE".

I remember I was thinking about putting some siding on my home and I wanted an estimate on how much it would cost. And I remember having someone from one of the sidind companies to come over. I forgot their name, but they always want to put a sign in your yard.

Anyway, all I wanted was an estimate and the sales rep wanted to give me a whole infomercial about their product. Not only that, he didn't want to leave until he had a signed sales contract.

Point is, no matter how many times I declined, he was still telling me about how easy it is to afford getting the siding and that no one else has a better deal. What do I look like? A fool? I really hate sales people.

I know that it's a job, but I really hate sales people.

Bottomline is, I didn't take the deal. And I was really angry at how pushy the sales guy was about getting me to sign a contract, when all I wanted was a simple question answered. Chances are, a lot of homeowners got taken for a ride by their mortgage company. And that's why many of them are in foreclosure. Too eager to buy, while the mortgage company are too greedy to sale.
4dollars15cents read my blog
Jan 30, 2008 | 4:16 PM

But you know what else I find interesting?

A lot of people may not know this, but there are some mortgage companies that will sale your mortgage to another lender and cause the homeowner to go through loops of trying to stay connected with just one lender.

The problem with this, is that the homeowner is never really settled, business wise. But when your mortgage gets sold, you have to make absolutely and positivitely sure that all of your payments are caught up and transfered, if it's due.

There's no need to send your payments to Mortgage Company ABC, when Mortgage Company CDE has picked up the contract. But if you did send the payment off, between the mix of everything, then you have to make certain that Company ABC gives the payment to CDE for credit or send you back your payment.

Sometimes, it's just best to refinance with a major bank. Because, eventhough all mortgages are subject to being sold to another mortgage company; a lot of major banks, such as Wachovia and BB&T do not. They make their money from owning property.

But on the side mortgage companies, such as Uptown and even Ditech will unload as much debt as they possibly can. And sometimes, that means selling a mortgage to another lender.

Homeowners just have to be more careful and really take off the rose color glasses and really focus on what they are really investing in.

If someone tells you that you can afford a 200k home, then you really want to buy a 130 to a 150k home. Why? Because when ever you factor what's your mortgage going to be, you, as a homeowner, also hav
4dollars15cents read my blog
Jan 30, 2008 | 4:17 PM

If someone tells you that you can afford a 200k home, then you really want to buy a 130 to a 150k home. Why? Because when ever you factor what's your mortgage going to be, you, as a homeowner, also have to factor your other bills, as well as savings.

Yes, homeowners, you need a savings account. And when you factor all of these matters and you find that you're living from paycheck to paycheck, then you can't afford that home. Buy down and buy more. What does that mean?

A 200k home in Buckhead cost about 150 in Riverdale. Same floor plan, just in a different area. What you need to look at, as a homebuyer, is location, how many acres of land, how many miles from work and school and social events and the overall quality of the community. But most importantly, you need to look at that house and compare it to a similar house in another area, to make sure that you're getting what you pay for.

I mean, I'm just saying. Houses are built, as if they are coming off an assembly line. And they are being built so close together. That's a fire hazard. So, as a homebuyer, truly beware of what it is that you're looking for. And go out and buy the most expensive MTV crib on the market. Buy down and save your money to build your own home on your own land. You can get an acre of land for at least five grand, depending on the area. You can build a nice home on an acre. And it's would be yours.
omarsm01 read my blog view my photos
Jan 30, 2008 | 8:24 PM

I CAN'T FIGURE OUT WHY HOUSES ARE STILL GOING UP WITH THE FORECLOSURE RATE LIKE IT IS AND THE ECONOMY FAILING.
omarsm01 read my blog view my photos
Jan 30, 2008 | 8:32 PM

WERE CAN YOU FIND AN ACRE OF LAND IN METRO ATLANTA FOR $5,000? IF A HOME BUILDER GETS AN ACRE, HE WILL PUT 3 HOUSES ON IT, WHEN I SEARCHED FOR A HOME, I LOOKED AT THE SCHOOLS, CRIME RATE, TAXES TOO, I AM A VETERAN SO I USED MY VA HOME LOAN, I QUALIFIED FOR MORE, BUT I PURCHASED A 4 BDRM 3 BTH HOME WITH 2 CAR GARAGE AND NICE LOT IN SNELLVILLE FOR 130,000 IT HAD THE HVAC SYSTEM UPGRADED AND FINISHED BASEMENT AND ALL APPLIANCES, THE HOME WAS BUILT IN 1986 SO IT'S BUILT PRETTY GOOD, MOST HOMES TODAY ARE COMPLETED IN A MONTH, YOU HAVE ALOT OF PROBLEMS GETTING THE CONTRACTORS TO COME BACK AND FIX THERE RUSH JOBS, I WOULD TAKE ALL THAT IN CONSIDERATION.
4dollars15cents read my blog
Jan 31, 2008 | 9:24 AM

Omar, you can't find an acre of nothing in Atlanta. That's why you're going to have to go outside of Atlanta, buy you some land and build you a house.

You do know there's other areas outside of Atlanta, right? Atlanta is a very small city and not a state. Why some people treat Atlanta like it's the only place on earth, I'll never know.

Not saying that about you, but I'm just saying.
cloneal
Jan 31, 2008 | 2:32 PM

You must be one of the investors riding around in your fancy SUV and living and your fancy house. Well, it has come a time where you are fixin to get caught up with. Are you educated enough to know when you have scammed people out of their homes?
4dollars15cents read my blog
Jan 31, 2008 | 3:51 PM

cloneal, if that statement was directed towards me, then you are wrong.

I'm smart enough to know a little something about real estate. But that would be because, before I got my home, I did a little research. And it took me about a year to realize what was going on. And what I found out was that as long as people are gullible, then they will always be taken advantage of.

Homebuyers place too much trust in their real estate agents and mortgage broker. Not realizing that you don't have to believe everthing that comes out of someone's mouth.

Don't be afraid to ask questions. And always examine the long term of the loan. And always keep a savings account and set money aside to help with those unexpected times, when there comes a divorce or a death of a spouse and even a lost of employment.

Don't get mad at me for given some sound advice. A lot times people need to talk with friends and family and others, before seriously thinking about getting a home.
Get_Real1
Feb 1, 2008 | 9:58 PM

Well I'll tell you what, I have been educated by reading all of this ----. Not all mortgage companies are bad and not all realtors are. You have to have your own realtor when purchasing a home. DO NOT use the realtor on the sign. They have signed a contract with the seller. Not you. They will represent the seller all the way through the contract. Also, MOST of the homes that are being foreclosed on right now are NOT adjustable mortgages. Most are fixed 80/20. I just love it when someone educates them selves on the internet. I'll bet your going to vote Clinton also.
There are a lot of poor unfortunate people out there that have fallen prey to preditory lending. That has nothing to do with purchasing a home that is above your means. Most foreclosures out there are below $200,000 and in the smaller cities around Atlanta. Yes, Atlanta is a metro city and yes there are smaller towns (cities) around it, But if you work in or near Atlanta you are not goin to purchase a peice of land in a 60 mile area unless it is somewhere you wouldn't want to put a dog house. Bottom line, yes talk with friends but get advise on an HONEST realtor, think of it like this, would you trust them with your life, your kids, your car and your home.
4dollars15cents read my blog
Feb 1, 2008 | 10:48 PM

Well, get_real1

Every thing, in life, isn't always as one track as you might think.

In fact, there are several factors of why people's homes are in foreclosure.

One of them is the fact that homebuyers didn't educate themselves before purchasing a home. The other one is the fact that a lot of these homes do have an adjustable mortgage rate. And lastly, you are correct, there are some homeowners with a fixed rate mortgage, but who purchase more house than they truly can afford.

That's why I stated that you should always speak with friends and family and even others, before you seriously think about buying a home. And when you do so, make sure that you understand the odds and ends of what being a homeowner really is.

That's why I also stated that homeowners do need a savings account. I know that might sound a bit elementary, but a lot of people don't have a savings account. However, if you are a homeowner, then you need at least two to three months worth of mortgage payments saved up. But you also need to contribute some money to the savings account, every pay period.

Because when you face those hard times, whether they be the lost of a spouse or a divorce, some minor home improvments, which can be tax deductable; a lost of employment or any unexpected situation; homeowners need that back money to help them keep some kind of normacy, until they can figure out their next move.

But the worst case scenario, is that having a foreclosure isn't the end of the world. No, it's not a good thing. But it's not a complete stumbling block. You're jus
4dollars15cents read my blog
Feb 1, 2008 | 10:49 PM

You're just going to have to start over from scratch and work your way back up to getting what you work so hard to have. But there again, it does require that you get some education.
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