Nash Peters

RATE RISE WILL HURT

Housing foreclosures are being caused by a series of events. Some lenders and appraisers became careless. Loans were made for overpriced houses, with terms that were too generous, such as very low or no down payments to unqualified buyers and investors. These are the loans referred to as subprime.

Many of the loans were made with interest rates and mortgage payments that rise over time. So over time the borrower had to either make more money to cover the increasing payments, or the house had to keep rising in value so the borrower could refinance to keep the same payment.