With some economists predicting a whopping 2 million additional foreclosures in 2011, it’s going to be another tough year for those who are unable to keep up with the mortgages that they committed to.
“A quarter of U.S. homes are underwater.”
– Joseph Stiglitz
What does it mean for a home to be underwater? It means that the market value, or price, of the home has dropped to a level below the amount owed on the mortgage. This is the situation that 15.7 million homeowners, representing 27% of all mortgaged single family homes, find themselves in. To get out of this situation, the homeowner would have to sell the house for less than was paid, and provide additional funds to fully pay off the mortgage. Those who don’t have the extra funds to do this may face the trauma of foreclosure and bankruptcy.
Choosing the right mortgage can make the difference between keeping up with your payments or falling behind. If you’re considering mortgages for the first time, here are some definitions that will help you navigate the lingo of loans.
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