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"Millions of consumers will have to absorb a major hit to their household budget in the coming months. About $265 billion in home equity lines of credit (HELOCs) will enter the repayment period in the next few years, according to a study from Experian, and consumers may see their monthly payments spike — in some cases, triple or quadruple what they previously paid." according to Christine DiGangi as she stated in her article "The $265 Billion Wave That’s About to Crush Homeowners" http://bit.ly/1FnjK2D
In her article, she talks about how many families used the equity in their homes and have only paid the minimum, interest payments, on these loans. Furthermore, since these loans were opened in 2005 through 2008, real estate values have been stagnate. As a result, owners may have difficulty refinancing their loans. She is predicting a skyrocketing rate of HELOC defaults.
Based on what I am seeing in my practice; houses still underwater, lingering unemployment and under-employment, and many struggling to pay what they have and save a little, I tend to think she is accurate. Are you in this situation? If so, it may be time to plan.
Talk to your finance company to figure out what is going to happen and when. Even if you think you know, confirm it. I cannot tell you how many times people have told me, "it went up more than I expected!" or "I never expected it to go up that much!" If you cannot afford it, look for financing now. If that is not possible or you have time, start working on paying down the principal now.
Whatever action you plan to take, start now. Don't wait for the first payment increase to find out you cannot make the new payment and risk losing your home. Know what you are facing and plan now. If you do not, you may find yourself in an office like mine, discussing bankruptcy, realizing you have less options at that point than you may have now.
If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.
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