Americans who have owned their homes for the past few years have a lot of equity in their homes: $9.62 trillion worth at the end of last year, up 13% from a year earlier, according to the Fed’s tally. Even if house prices fall a bit, homeowners still will have significant equity — except for those who have hocked nearly all the increase in home values with frequent refinancing or large home-equity loans.
From the Realestatejournal. This should not come as news to anybody. The concept is simple, one that I was taught long ago. Don’t gamble more than you can afford to lose. Short-term interest-only mortgages and the like can be very good vehicles for those who plan for the seemingly-inevitable rise in rates accordingly. Those who do not may find themselves in with many others seeking bankruptcy/foreclosure.