Many homeowners in the Las Vegas valley may be overextending themselves, because home foreclosures have jumped dramatically in the past year.
The median price of a home is up to $314,000 and that has driven the monthly mortgage payment up as well, which is up nearly $200 a month since this time last year to nearly $1,800.
The sounds of an auctioneer saying "going once" and "going twice." Finally, saying, “Sold back to the beneficiary for $303,487.08." That's what most people will find at daily auctions of what were once peoples American dreams.
Republic Mortgages Scott Gillespie warns the worse is yet to come.
"A lot of people don't fully grasp what is going to happen with the mortgages that are out there," Gillespie said.
Gillespie says Congress is considering a bill making certain adjustable rate mortgages illegal because people don't realize what they are getting into.
"A lot of that has to do with the advertising we have done as a mortgage industry," Gillespie said. "You can buy this much house with this payment and people focus on that payment as opposed to that payment is derived from an interest rate that is below market and has the ability to change."
With recent interest rates that are going up, more and more Las Vegans cant afford their mortgages.
From January to February the number of foreclosures jumped 99-percent.
A three-bedroom, two-bath house is one of 127 homes on the home foreclosure report where the American dream is going wrong.
Gillespie said the trend is expected to continue for years, and investor Rick Korbel recently saw the spike in for closers and started attending local auctions.
Korbel says struggling homeowners need to face reality before its too late.
"They know they are in over their head," Korbel said. "When people are behind on their bills they tend to avoid the phone, put their head in the sand and think that it is not happening."
Experts say that's the last thing a homeowner should do. Lenders recommend facing the problem head on by contacting your mortgage broker or trying to sell.
Homeowners who will be hardest hit are expected to be the ones who bought homes above the median price of $314,000. There's more bad news for homeowners. In a list of 100 cities, Forbes Magazine ranked Las Vegas dead last for real estate appreciation rates.
Email reporter Ky Plaskon at kplaskon@klastv.com
