Indiana Foreclosures Within National Averages

There is no one cause that can be attributed to an increase in Indiana foreclosures, except that people cannot or will not make their mortgage payments. With close to 5,000 residential properties currently in foreclosure, the total may be high but for the state’s size, it is not out of proportion compared to the remainder of the country.

 There are various reasons people fall behind on their mortgage payments and one of the most recent is the adjustment in mortgage rates. Many Indiana foreclosures are being caused by an increase in mortgage payments coming due with an increase in interest rates. During the housing boom in the beginning of the decade, mortgages were written with an adjustable rate mortgage, hinging on the prime interest rate. Recently, the interest rate has risen, taking the mortgage amount up with it, leaving people unable to make the payments.

 While this practice is perfectly legal and allowed people to buy much more home than they normally could have afforded, without planning for the eventuality of increased payments, homeowners are finding themselves in financial trouble. Indiana foreclosures are inching upwards and some believe it will only escalate before it begins to trend back down.

Mortgage Rates Fluctuate With Interest Percent
When the prime rate fluctuates, the rate for which most adjustable rate mortgages are calculated, the monthly payment also fluctuates. For instance, a 25 years loan at six percent for $165,000 would average a mortgage of about $1,063. A rate adjustment of only one percent, up to seven percent, would increase the mortgage payment to $1,166 per month. That is an increase of over $1,200 per year, an amount that many people have not planned on spending on housing.

 With these increases, Indiana foreclosures are apt to continue to increase. Add in those suffering from injury or illness and are unable to work or those who lose their jobs, without the financial planning needed to stave off Indiana foreclosures, their houses will also be heading for the auction block.

 Add in predatory loan practices and increases in the costs of several other costs associated with everyday living and it is a wonder Indiana foreclosures are not higher than they are. Utility costs, health care and prescription drug costs along with gasoline and general transportation costs, all add up to take a chunk from the average person’s disposable income. When state and federal taxes threaten to take an even bigger bite out of their paycheck, some may feel they are fighting a lost cause.