Upside Down Home Owners
There are 4 major factors that most upside down homeowners share.
1) Most upside down mortgages were subprime loans or option ARM (adjustable rate mortgages) loans. In some cases, buyers weren’t fully informed or educated about ARMs but these loans were widely used throughout the banking industry.
2) Homeowners who bought between 2003 -2008 are much more likely to be upside down because they bought at the height of the market.
3) When the great home price run up occurred, a lot of people took out second mortgages or got a home equity line of credit. Now with a second mortgage and home values dropping these owners are much more substantially underwater than they would have been if they didn’t take the second mortgage.
4) People who bought in areas that experience the greatest gain in house prices are now the areas that are experiencing the greatest drops in home values. These areas include Nevada, California, Florida and Arizona.
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