If you have a home equity line of credit, then you may be one of the many Americans whose payment is about to increase.
According to an article in the New York Times, the time is quickly approaching when borrowers will be forced to start paying principal on top of the interest they have been paying. Over the next few short years, about 60% of these loans will start requiring both principal and interest payments.
Will borrowers have the ability to pay this increased amount? If not, will they have sufficient equity to be able to refinance their loan or will they be underwater? What will this do to the already shaky economic recovery underway?
The article goes on to say that this could have been avoided had the government intervened when it created loan modification programs for first trust deeds. However, as we have seen in the “real world,” these equity lines are turning into unsecured debt that is turning into toxic loans for the lenders.
Only when the lenders begin to drastically reduce the balances owed on these loans will borrowers start seeing the light at the end of the tunnel.
Prudential California Realty
North San Diego County and Carlsbad Real Estate