By all indications the Massachusetts housing market is in full recovery. Many of the previous stories discussed on this blog document how experts in the real estate field predict that current trends may hold firm and improve the market in the foreseeable future.
One factor that may put a damper on the upward trajectory of the market is the reset of many second mortgages. Second mortgages, also called home equity lines of credit, are debts taken out against real property and often have variable structures that allow mortgage holders to only pay interest on them for a period of time.
For many people who took out second mortgages during the real estate boom of the prior decade, the period of only paying interest may be up. Second mortgages generally reset or require interest and principal payments after ten years. Now that a decade has passed, some individuals may be unprepared to pay the increased amounts due and may default on their second mortgages.
Some people may think that they can avoid the problem by refinancing their debts. While this option may be available to certain individuals, others may find that they do not qualify for refinancing.
One expert recommends that anyone with a second mortgage that is about to reset carefully look at his upcoming obligations. Planning for an increase in mortgage payments can help a person ease into the higher commitment and avoid defaulting on their mortgages.
Individuals who have questions about their second mortgages and how to manage their resets can speak with trained real estate professionals. Lawyers who practice real estate law are specially trained to understand the complexities of mortgage obligations and can help mortgage holders make effective financial plans for loan management.
Source: Worcester Telegram News, “Storm warnings as equity loan resets near,” Kenneth R. Harney, Nov. 7, 2013