Ohio leads the nation in foreclosures
Cleveland’s zip code, 44105 has the largest amount of any city over the last three months. With a total of 784 filings, Atlanta Georgia is in second place according to CNNMoney.com and RealtyBid.com.
So why so many foreclosures not only in Cleveland Ohio but around the country? Many say it’s due to loan types and the economy. Recently, many non-conforming lenders in Ohio have shut their doors. These lenders gave mortgages to those with low credit scores as low as the high 400’s. Many buyers also have taken advantage of the different home loan programs such as ARMS, (adjustable rate mortgages) interest only loans and cash out loans, (borrowing up to 125% of the home’s value) with declining values in homes recently and expected to extend for at least another couple of years, these loans can be quite dangerous for the average household with the average income. Those home buyers with yearly bonuses or other plans for payment such as business owners, etc., may benefit from these loans. These mortgages are also wonderful for people who want a larger, more expensive home but don’t have the income at the moment. They may be expecting a raise or a spouse to earn more money in the next couple years. If this is not you, taking on such a loan could end up detrimental and a financial disaster. You could actually owe more than your home is worth and not be able to keep up with the payments once the adjustable rate kicks in thus leading to bankruptcy, foreclosure, or lack of needed repairs to your home leading to an even additional loss in value in an unstable market where competition is brutal for selling and upgrades are a must.
The economy in Cleveland could certainly use a boost and the schools and local businesses are in need of additional funding. I personally think it’s a combination of loan programs and the economy that cause us to lead. Thirty years ago it was a must to put 20% down on a home and foreclosures were rare compared to today. Buyers have less invested in real estate when they’re purchasing for 100% or more and not spending a dollar of their own money. This makes it more tempting to let go especially when their ARM kicks in and the monthly payment almost doubles in most cases within a month. The situation could easily be helped by lending institutions offering more education and realistic explanations before getting papers signed. Guidelines should also be a little tougher when it comes to high-risk buyers.
It’s a great thing that almost anyone can live the American dream and purchase their own home but if it’s not the right time or it’s not realistically affordable, it turns into the American nightmare for the neighborhood, other homeowners that are trying to sell, and the city in general when stained glass is covered with plywood.
If you have any questions regarding financing or buying your first home, please feel free to contact me anytime. I’d be happy to assist you and go over your individual circumstances to see if it’s the right time for you to purchase a home in the Cleveland Ohio area
So why so many foreclosures not only in Cleveland Ohio but around the country? Many say it’s due to loan types and the economy. Recently, many non-conforming lenders in Ohio have shut their doors. These lenders gave mortgages to those with low credit scores as low as the high 400’s. Many buyers also have taken advantage of the different home loan programs such as ARMS, (adjustable rate mortgages) interest only loans and cash out loans, (borrowing up to 125% of the home’s value) with declining values in homes recently and expected to extend for at least another couple of years, these loans can be quite dangerous for the average household with the average income. Those home buyers with yearly bonuses or other plans for payment such as business owners, etc., may benefit from these loans. These mortgages are also wonderful for people who want a larger, more expensive home but don’t have the income at the moment. They may be expecting a raise or a spouse to earn more money in the next couple years. If this is not you, taking on such a loan could end up detrimental and a financial disaster. You could actually owe more than your home is worth and not be able to keep up with the payments once the adjustable rate kicks in thus leading to bankruptcy, foreclosure, or lack of needed repairs to your home leading to an even additional loss in value in an unstable market where competition is brutal for selling and upgrades are a must.
The economy in Cleveland could certainly use a boost and the schools and local businesses are in need of additional funding. I personally think it’s a combination of loan programs and the economy that cause us to lead. Thirty years ago it was a must to put 20% down on a home and foreclosures were rare compared to today. Buyers have less invested in real estate when they’re purchasing for 100% or more and not spending a dollar of their own money. This makes it more tempting to let go especially when their ARM kicks in and the monthly payment almost doubles in most cases within a month. The situation could easily be helped by lending institutions offering more education and realistic explanations before getting papers signed. Guidelines should also be a little tougher when it comes to high-risk buyers.
It’s a great thing that almost anyone can live the American dream and purchase their own home but if it’s not the right time or it’s not realistically affordable, it turns into the American nightmare for the neighborhood, other homeowners that are trying to sell, and the city in general when stained glass is covered with plywood.
If you have any questions regarding financing or buying your first home, please feel free to contact me anytime. I’d be happy to assist you and go over your individual circumstances to see if it’s the right time for you to purchase a home in the Cleveland Ohio area
posted by Cecilia Sherrard at
10/02/2007
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