More people in America are missing payments on their home equity loans than at any time in this decade, Moody's Investors Service said on Dec 13th, showing how the U.S. housing crisis has spread to many loans that were once generally considered safe.

Moody's U.S. Home Equity Index Composite showed that the number of loans at least 60 days past due or that have entered the foreclosure process was 16.53% in September 2007. That's more than double the 7.93% rate one year ago, and more than triple the 4.99 percent level in June 2005. A recent comparison was 15.23% in August 2007.

Moody's announced their results the same day RealtyTrac Inc., a real estate data firm, said U.S. home foreclosures in October soared 94 percent from a year earlier to 224,451 units, although the total was 8 percent below the 243,947 foreclosures mark set in August.

To gain a better understanding of what is happening with so many people, let us look at what a home equity line of credit is. It is a financing instrument used by homeowners who want to borrow against the equity in their home. There are several different types of home equity lines of credit. These differences are frequently based on the interest rate charged the homeowner.

Sometimes a home equity line of credit will have variable interest rates and usually this is the part that most homeowners did not understand or anticipate. With variable interest rates the normal rate can vary between 4.25% to 17.0%. With this variance, the homeowner cannot know for sure from month to month what the interest payment will be. The interest rate on the loan can vary based on a certain index.

In some cases the home equity line of credit offers a low introductory "teaser" interest rate. Lenders and loan officers alike offer the product with ads that read like this: Borrow $100,000.00 on your home and pay $395.83 per month with an interest rate of 4.75%. These rates sound attractive, but they generally do not emphasize the fact that the homeowner will later be responsible for a considerably higher rate. That start rate could actually be between 6% - 11% above the prime rate in any given month, given the borrower's index. Most homeowners never read the loan materials carefully, so they never understood exactly what the payments could be and now their family's home could be in jeopardy.

Another concern has been the costs of the application process. Some offers of a home equity line of credit come with a large one-time fee, many times $1000 to $3,500. So just by obtaining the loan, besides the interest charges, that deficit has to be repaid.

If the differences in the various types of home equity lines of credit confuse the homeowner, then it may be better to consider alternatives to the home equity line of credit. Other options include: a fixed rate second mortgage or a credit line that does not use a person's home for collateral.

Misunderstandings, compounded with a tougher real estate market has left many in foreclosure and now they are forced to find a new place to live.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Stop Foreclosure Fast - Tips - Real Estate Help
As the foreclosure rate for the nation remains steady, Idaho foreclosure rate is slightly decreasing. In Idaho there were 569 foreclosures in April, 542 in May, and 501 in June of 2007. Even with the slight decrease in the foreclosure rate in Idaho, the number of foreclosures in the nation remains ... more...

Colorado Foreclosures- Plenty To Go Around
Colorado is a state famous for firsts: it was the home of the world's first rodeo; its voters were the he first state to elect women to the state legislature; it was the first to offer a delicacy known as Rocky Mountain Oysters; and it is currently the US leader for the number of its homes in ... more...

Central Florida Residents - See How You Can Avoid Foreclosure
The numbers are staggering. In 2006 the percentage of Americans that were faced with a foreclosure was .58% of all house holds, in 2007 that percentage rose to 1% that is a 42% increase and 1% may seem like a small number but we are talking 1% of millions and millions of homes. For the state of ... more...

Understanding Subprime Lending And Its Implications To The Current Graduate Student
IN THE BEGINNING In a manner similar to the numerous economic crises before it, the subprime lending bust actually began decades before anyone knew it. The Community Reinvestment Act of 1977 pushed banks to extend more credit in communities where they operated. This drew many lenders to ... more...