According to a May 18, 2006 article in the Wall Street Journal, “Late Payments on Mortgages Rise: Studies Find Higher Loan Delinquencies”, as a result of the 2005 lending boom, home buyers with huge debt are now having a hard time keeping up with their monthly mortgage payments.

In places like the Southbay, housing costs have risen astronomically in a few years, and lenders have pushed to continue generating business in spite of rising interest rates and home prices.

This means many home buyers may be biting off more than they can chew and living in homes they are stretching their finances to afford. To make matters worse, many are tapping into home equity loans, thanks to the slew of radio and television commercials encouraging you to do this.

When we were looking to buy our first home in the southbay, we wondered how many people could afford living in the million dollar homes we see cropping up in the southbay, when we are a dual-income couple was still saving and waiting to afford a house. We didn’t want the ARM option because we saw it as a train wreck waiting to happen, not as a “cash flow management option” that some lenders see. Read Original Article