Americans Remain Behind on Mortgage Payments

We are currently living in a time in which 1 of 10 Americans are behind on their mortgage payments. This is something that was almost unheard of three years ago as we were in a housing bull market. During that time, everyone was excited to purchase a home and many wanted to purchase more then one. It was actually a time in which Americans were willing to purchase homes that they would never sleep in. Now, in 2009, things have drastically changed, especially for these individuals that felt the need to buy more then one home.

Although mortgage rates are hitting 37 year lows, many Americans remain behind on their mortgage payments because they did not make sound financial decisions over the past five to ten years. Buying on credit to purchase more than one home has never been a smart decision during any time period in the history of the United States. Why Americans felt this was a good idea in the 2004 and 2005 is quite interesting. The public perception was that the economy was so strong, especially with home prices appreciating at great rates, that there was no way the value of investments would decline. Sadly, this psychology lead to one of the worst declines in the housing industry in the history of the United States. Several major markets in the western part of the country have declined over 50% in value. It is hard to imagine buying a home for $500,000 and losing $250,000 of value in a little over four years. This could possibly be a larger amount of money then many of these individuals will make in several years of their life, especially in this economic environment.

The one major positive that will come out of this enviroment is that Americans will learn to stop buying on credit, especially a great amount of money they will not have access to for several years. A very smart decision would be to pay off all bills possible, especially those with high interest rates. While this will be hard at first, it is something that most Americans need to do before the economy gets worse.

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