If you are like the millions of Americans who are paying their mortgages on time, you probably think the mortgage crisis is someone else's problem. Foreclosures are affecting every American home owner because they are so widespread, and they are driving down the value of homes in virtually every neighborhood in America.
Average price paid for the homes with upgrades was $550,000. forex factory
Then his son, Joe Jr., was accepted to Yale. Joe refinanced his house to raise the tuition money. He was still ok, because house values were appreciating and he had equity in his house. Next, his daughter got married, and Joe took out a second mortgage to pay for the wedding.
Fast forward to 2006. Home values have started to drift down brought about by the subprime mortgage crisis. But Joe is still ok. Now Joe has decided he might sell his house because the kids are gone and he doesn't need so much space. Joe considers a short sale where the bank forgives as much as 20% of the loan amount. This makes it almost impossible to negotiate a short sale. whitney bank
Then catastrophe strikes, and Joe loses his job. He can longer afford the big mortgage payments. Next thing you know, Joe's house is listed in the newspaper in the Sheriff Sale announcements. The bank with the primary mortgage moves in and takes over the house. Joe is forced to move out. The bank hires the ABC Realty Company to liquidate the property. Joe paid $550,000 for the house. The bank decides to list the house at $450,000. The bank lowers the price. The buyer perceives this as a distressed property. The house is being sold AS-IS, so no repairs will be made. the final sales price is decided: $375,000.
The buyer's lender sends over an appraiser. He decides the house is worth $395,000. Because now your house that you paid $550,000 for is worth $400,000, maybe less. If you are lucky, Joe had the smallest model in your development with the least square footage and no upgrades. But if he had the granite kitchen, finished basement and bump outs, you are screwed.
If you decide to sell your home, you will not get what you think you deserve.