Is a 30 year fixed rate mortgage loan right for you? What is the advantage of a 30 year fixed rate mortgage? 30 year fixed rate mortgages offer security even if you plan to sell or refinance your home after a few years. Watch this Expert Real Estate Tips segment and learn all the advantages of a 30 year fixed rate mortgage loan.
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125% Home Equity Loans – Danger Of Borrowing More Than Home’s Equity

Because of home equity loans, homeowners are able to acquire extra money for a wide variety of purposes. Moreover, these loans make it possible to tap into the equity built without selling your home. There are many home equity options. Aside from getting a loan, homeowners may opt for an equity line of credit. Additionally, there is the 125% home equity loan option.

What is Equity?

The concept surrounding 125% or no-equity home loans is very simple. Ordinarily, homeowners would acquire equity loans that equal the amount of equity built in the home. Before going any further, it is important to understand how a home’s equity is determined.

Two factors contribute to a home’s equity, rising home values and amount owed to the mortgage company. If a homeowner’s property is valued at 0,000, and they owe the mortgage company 0,000, the home’s equity totals ,000. In this scenario, the homeowner may obtain a home equity loan up to ,000

How 125% Home Equity Loans Differ

If applying for a traditional home equity loan, homeowners may obtain a dollar amount not to exceed the home’s equity. This money can be used for home improvements, starting and operating a business, retirement, debt consolidation, etc.

On the other hand, if a homeowner is approved for a 125% equity loan, they are able to borrow more than their home’s equity. Because a portion of the loan is unsecured, many lenders steer clear of these sorts of loans. However, if your credit rating is high, several mortgage lenders are ready to offer a no-equity loan.

Reasons to Beware a 125% Home Equity Loan

125% home equity loans are more fitting for homeowners who require a large sum of money. Typically, these loans are common among those attempting to start a business. Moreover, these loans are beneficial for homeowners embarking on major home improvement projects.

If home prices continue to rise, 125% home equity loans will pose little threat. On the other hand, if the housing market takes a sudden nosedive, those who accept 125% home equity loans will likely owe more than their homes are worth.

Shady lenders will offer 125% equity loans because it’s a win-win situation for them. If a homeowner defaults on the mortgage, the lender forecloses on the property. However, because the amount owed exceeded the home’s value, homeowners are obligated to pay mortgage lenders the difference.

Tax income losses from foreclosed homes affect Californians in unexpected ways ? ForeclosureConnections

Thirty thousand Californian homes are moving through the foreclosure pipeline.

Property taxes plummet in the process.

City officials and schools are the latest victims of the blight.

Beyond the shame of tens of thousands of foreclosed, abandoned, shuttered homes in East Bay, and elsewhere in the State of California, lies a second blight – year upon year of property tax income that is supposed to be funding the cities, schools and other infrastructure on which Californians depend is vanishing in the shifting sands of economic drought.
For individuals, the end of the beginning of the foreclosure road is when the sheriff put them on the street – the work of government officials begins then, as they make difficult budget cuts, lay off staff and otherwise bite the bullet until the foreclosed properties are back in private hands again. Some of them may find themselves personally affected by the cuts they have to recommend.
In the East Bay area alone, banks and other lenders own over 10,000 foreclosed homes, with just a pittance up for sale in these price-depressing times – and a further 20,000 in the pipeline heading the same way.
“There is no question government services at all levels are going to suffer because of this,” said Contra Costa County Assessor Gus Kramer. “It’s just one of the trappings of the economy we’re in.”
You can almost feel the pain. Concord City has put off a quarter of its workforce. Antioch has shelved a quarter of its annual budget. Hayward has levied further taxes to avert redundancies. The effect will be more dispersed in schools – they depend on a combination of state income sources, and this will take a while to filter through.
A representative of the California Department of Finance admits that they failed to account for the foreclosure trend when they prepared their current budget, because nobody thought about it at the time. Current thinking is that State property taxes will fall 4.1% in the current period, and another 3.1% in the following year, both up on previous estimates. The biggest driver is the fall in property prices. This April the median buyer in Bay Area paid just 0,000 compared to the 2007 peak when 5,000 was the number that applied. Elsewhere, in areas like East Contra Costa County the drop is worse and approaching 65% in some places.
Many analysts are predicting a fresh tsunami as interest rates start rising. The situation a year ago could be repeated, affecting both economy and housing market, and stretching recovery further out. Most cities will be affected to some extent meaning that the losses will be spread throughout California.