Are You in Over your Head?

3 years ago, the Real Estate Market was red hot. Everyone wanted to become a homeowner. Everyone seemed to be chasing after the American Dream. Many people were investing in Real Estate with the hopes of buying a property to gain equity. Demand rose and the prices skyrocketed. Many Real Estate investors bought homes so they could be flipped to make a profit. Mortage brokers were offering ARMs (Adjustible Rate Mortgages), and Interest only Mortgages.

The ARMs is they are not a fix rate mortgage and the low rates are usually for a period of 3, 5, or 7 years. and with the Interest only loan customers are able to buy large homes that they could not afford if they did the tradition 30 year mortgage. The sharks as I usually call the mortgage brokers don't always explain how these mortages work, they entice customers by giving them a rate of 1percent to 4 percent, but what they don't explain is that this rate does not last forever. 2006 was a record year for forclosers and 2007 will even lead to more forclosures.

Today stocks tumbled on the news of sub prime worries. The sub prime mortage industry's has been on a downward spiral and it as cast an effect on the markets, as worries grow over who will be incharge of the bill. Subprime lenders are mortgage lenders who lend to people who have little or no credit history, or with a less than perfect credit score. Subprime lenders usually lend at a higher interest rate to compensate for imperfect credit.