The introductory reason household are forestall is because householder can no longer pay the mortgage . There are several reason for this . First , people may have take on too big a committal in the first place , but were able to do so because of the attractive terminus of a subprime mortgage . Before the caparison collapse , many people with low income and low credit scores were tender asubprime mortgagewith low interest rates that made them ostensibly affordable . When the interestingness rate and therefore the mortgage payments increased , they found that they did n’t have sufficient funds to make the payments .
Another rationality for foreclosure is the state of the economy . In a boom economy , theatre prices increase but in a receding house prices can precipitate dramatically . That can mean that the value of the house turns out to be much less than themortgageowed on it . In this situation , the homeowner often has little pick but to forestall . home prices are also likely to fall in areas where there is an oversupply of newly built rest home , which investors are now unable to sell due to the fall in the market .
With the recession , many people are losing their jobs and are ineffective to remain to make their payment . If people need to continue operate , they may have to relocate to another state . They will then have to pay two sets of house payments while they are making the modulation and waitress for their first business firm to sell . sickness or mourning can also be a factor in foreclosure . Huge hospital bills and the loss of income of the primary breadwinner may mean that mortgage payment are neglected . And , of course , another rationality is divorce . When people divorce , one party moves out and who pays the mortgage may be a combative issue . What often happens is that , in the end , no one pay , and the house is foreclose .
