Why are so many people losing their homes? How can I avoid this?

My fiance and I will soon both be turning 21. As young people looking to own a home within the next five years, what good advice can be given?

Every day on the news we hear about more people losing their homes, and every week in the paper it seems that there are more homes being foreclosed.

Is this situation the fault of the buyers?

What exactly is happening to cause these people to lose their homes? Is it that they%26#039;re not getting fixed rate mortgages?

My fiance and I both have a small sum of money saved for a down payment, our bank (Sikorsky Credit Union) offers good mortgage rates and requires a 5% downpayment for fixed rate mortages. We intend to have that 5% + more.

Asside from buying realistically (staying within our limits), can chosing a fixed rate mortgage prevent us from being one of the many people who lose their homes??

Any advice would be great

Why are so many people losing their homes? How can I avoid this?care credit

By %26quot;doing your homework%26quot; you%26#039;re already one step ahead of most.

The blame for the current mortgage crisis does not fall squarely on any one shoulder in particular, dishonest loan officers %26amp; ignorant borrowers play an equal part.

The mortgage %26quot;Type%26quot; really doesn%26#039;t make a difference if a borrower can%26#039;t afford the payment. A Fixed mortgage offers a little more security in that it%26#039;s rate will never adjust and your P%26amp;I (Principle %26amp; Interest) payment will never increase.

Credit unions typically offer pretty good rates but if you are putting down anything less than 20% you will most likely have to pay PMI (Mortgage Insurance) which will be tacked onto your monthly bill.... You can finance up to 97.75% in an FHA first time homebuyer loan and their PMI is at a huge discount over what you would pay elsewhere.....

Putting money down on a house is great, IF you can afford it.... just don%26#039;t put down everything you have. Leave yourself a cushion for the little things you will want/need to get done immediately after moving in. When I bought my first home, it looked perfect.... we didn%26#039;t even think we were going to need to paint... once the owners got all their stuff out though, it was a different story..... We wound up painting everything and then had to have a heating element in the hot water heater replaced.....thank god we held a little back and were able to pay for everything....

Homeownership is great and it sounds like you%26#039;ve got a good head on your shoulders....you will be fine. All renting does is pay someone else%26#039;s mortgage anyway.... Good Luck!!

Why are so many people losing their homes? How can I avoid this?

loan

i%26#039;ll be back for the answer to this one!|||Make sure to have a down payment and obtain a fixed rate loan. The main issue is that most houses being foreclosed upon were purchased with 100% financing and ARMs or interest only mortgages with the intention of home prices continue to increase and the owner to be able to refinance out of the ARM when they adjusted. However, without equity in the homes people can%26#039;t refi since property values have declined. Also, mortgages are much more difficult to obtain than just a year ago so that will help show whether or not you are ready, simply in if you can get approved. If you only put 5% down you%26#039;ll still be required to pay mortgage insurance, you%26#039;ll also need a very good credit score, and stable employment showing you can afford the property and all other liabilities with less than a 40% debt to income ratio. When the time comes check out FHA loans. The only issue I see is that you cannot provide a housing history since you haven%26#039;t actually had 12 months history or paying rent or a mortgage, but a good broker can find ways around that and if your credit is high enough it shouldn%26#039;t matter. Good luck|||Pay your mortgage is the first thing you can do. But note that you shouldn%26#039;t buy more than you can afford. I know that Mortgage companies will lend you up to 2.5 times you salary. But this can leave you cash poor. Especially when you add Taxes and insurance into the equation and Taxes go up every year as does insurance.

So if you have a a 1000 per month house payment you can expect an additional 500 per month in Taxes and Insurance.

Now when in comes to financing your home always use simple intrest. Do not use any of the exciting commission generating offers of loan salesmen. Simple Interest only with no early payment penalties.

The balloon payments are killing people now because they bought houses they couldn%26#039;t afford so the borrwed with an adjustable rate morgage or an interest only loan for the first 5 years. ETC.

Good Luck.|||I feel that the main problem is that people are borrowing more than what they can afford. Banks were allowing borrowers to bite off more than they can chew. The flex rate mortgages didn%26#039;t help either. People didn%26#039;t realize that their interest rates were going to jump so high.

My advice is talk to your bank about a payment you can afford. Yes, my husband and I were approved for X amount of dollars, but we knew we could not afford that monthly payment. So we figured out a monthly payment we wanted to stay under.

Get a fixed rate. Shop around, too, and check on the closing costs.

As for the insurance you have to have if you don%26#039;t have 20% down...It will drop after so many years, because you%26#039;ll have it earned in your house. If that makes sense.

It%26#039;s definately a buyer%26#039;s market. My husband and I have been looking since last summer.

DO NOT SETTLE FOR ANYTHING LESS!

My husband and I always wanted to live in a certain area, but we knew it was just out of our price range for the time being. Well guess what? We just placed a bid on one of these homes! We found a short sale, and I believe it%26#039;s going to pull to our advantage.

Good luck!|||save money - put at least 5% down, you%26#039;ll need another 5% for closing costs

have extra money for 3-6 months expenses - emergency fund

have no debt, other than a car loan and keep that as low or close to being paid off as possible

don%26#039;t buy a house bigger than you can afford

do not get an adjustable rate mortgage - if you can%26#039;t qualify for a fixed rate mtg at then current int rates for the size mortgage you want, then you shouldn%26#039;t be buying a house|||Congratulations on doing your homework!

It wasn%26#039;t just the adjustable rate mortgages that got people in trouble. It was people just trying to live beyond their means. Lenders were handing out loans to those who had no business getting them and since these folks couldn%26#039;t afford the payments, they are losing the house.

Being financially responsible will prevent you from having hardships down the road.