Monday, October 11, 2010
The mortgage mess lingers on
We bought our home four years ago in 2006. It is a modest, three bedroom house in a quiet neighborhood in Villa Rica, a small town to the west of Atlanta. The town was rapidly growing and had recently added a super Wal-Mart and a Home Depot. A Chick-fil-A opened shortly after we moved in.
Realtors and mortgage loan officers offered interest only loans to us. They said that we could use this type of loan to buy a bigger house, then refinance in a couple of years when the value of the home had gone up. Instead, we chose to take the responsible path and buy a smaller home financed with a 30-year, fixed rate mortgage. Our plan was to buy the house, live there a few years, then sell it at a profit to finance a larger, more permanent home.
Our plans were shattered by the mortgage meltdown of 2008. Overnight, the value of our home crashed. We had no idea by how much because no homes were selling to compare it to. Of the five houses, closest to ours (one on each side and three across the street), three went through foreclosure over the next two years. Two are still vacant.
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