Home Owner Credit Crisis – Some Of The Causes

Increasing numbers of homeowners are barely able to cover their mortgage payment due each month. One reason is that many have taken out an adjustable rate mortgage (ARM) which sounded good at the time, due to affordability. However, with fixed rate periods have either come to an end or are coming to an end and chances are their interest rates are going to go up which will make monthly payments go up.

Another cause of increasing mortgage default is that even though a home owner has kept up with their payments in hopes of refinancing into a more favorable and stable loan program, they cannot because their home value has dropped below their mortgage balance – leaving them in a very difficult situation.
A third cause of many home owners having trouble at the end of the month making their credit payments is the rising costs of having credit cards. Late fees, over limit fees have gotten expensive over the years and if you are using your cards to survive and happen to make a mistake with paying late or going over your balance you are going to pay for it. Many people do not have the extra cash in their budget to pay for the extra fees which means they have to rob Peter to pay Paul. Over time this adds up to more and more financial hardship.
A fourth reason for financial hardship comes from a person who doesn’t have a good credit rating, what who wants to consolidate their bills with a high interest loan which carries high fees to obtain. No matter what reason or promises made for the loan, homeowners now find themselves in high risk debt and in danger of losing their home.