I'm not surprised that people are this stupid. The lure (and lie) of "homeownership" was just too great, there was just too much pressure to buy, and not just buy any old home, nope, buy that awesome new McMansion your wife wanted so badly.
Then that nice realtor and her friend the mortgage broker, who was also so nice and caring, were able to get you that no-down, option-arm something kind of loan, and your payment was only $1000 a month! Less than you were paying in rent! See, "owning" IS cheaper than renting! No matter what HousingPANIC and those stupid bubble blogs were saying.
Plus it's always a great time to buy, and real estate can only go up and up and up! Man, are you smart or what.
Then why is my payment $4000 this month, and why did my neighbor just sell for $400,000, not $500,000?
Oh, crap.
Defaults up as home prices fall in Placer County
Default notices have risen 262.4 percent in the fourth quarter of 2006, prompting some people to put their homes on the market, even though the median home prices in Placer County continued on a downward trend. Photo
There you are, living in the house of your dreams. It cost you $500,000, but you're only paying $1,100 a month after you 100-percent financed your home with an interest-only pay-option adjustable rate mortgage, known as an ARM.
Then the market changes.Your completely financed home, after the market has cooled, is now going to cost you almost $4,000 a month for your mortgage. Welcome to the world of some of Placer County's residents.
Even though figures showed an upward trend in some areas, the overall Placer County real estate prices has continued to go down, making those who jumped in at the height of the boom feel the pinch.
"The reason for the increase is because interest rates were low for a long period of time and consumers were getting loans that normally would be out of their reach, King said.
Consumers who got 100 percent financing on negative amortization loans and other adjustable-rate mortgages are starting to feel some discomfort, and more could be on the way."
1.5 trillion in loans will be adjusting this year (nationwide). They're going to adjust a lot, some will adjust two percent," King said. "It's going to be an interesting year to see what happens with foreclosures, that's for sure."
"It's got to be tough and be scary, but if they can make that payment they should try and make it," Maki said. "Because I think the property values will come back up, they always do."
