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Billions of dollars of home equity credit lines have some mortgage and credit experts worried that it will bring trouble for the real estate market in the near future. These second mortgages were taken out ten years ago, before the housing bust, and have only required interest payments until now. The ten year mark is coming up for many of these, and the borrowers will have to begin to pay both principal and interest very soon. This could cause some trouble if those that took the loans out cannot or will not pay what could be up to $600 a month or more on top of what they have already been paying. If they can't or won't pay, the banks that own the note can foreclose on that house. The market is looking at about $30 billion in home equity lines coming around to reset in this way for this coming year. That will be followed by another $53 billion in 2015 and $111 billion in 2018.
Amy Crews Cutts, the chief economist for Equifax, does not have a positive outlook on borrowers ability to pay the upped monthly prices. She believes that a large number of these people will either be foreclosed on by their bank or they will have to have their loans modified or refinanced to handle the new load, though refinancing may not be an option in many cases because the borrowers simply won't qualify.
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