Consider Debt Consolidation, Mortgage Options

Bad credit Florida mortgage foreclosures are a direct result of a slower housing market throughout the Sunshine State. But there’s another, less obvious factor wreaking havoc among it consumers: Credit card debt.

Wes Wannemacher charged $3,200 to pay for wedding expenses. After six years, he paid down approximately $6,300 on that debt, yet still owed $4,400 - more than he charged in the first place.

It’s a story all too familiar to many Floridians.

Credit card debt is a slippery slope. In an era of sky-high Florida home mortgage payments, it’s all too easy to slack off on credit cards instead and thus fall victim to the web of penalties, late charges and fees therein.

Evidence shows credit card debt is becoming increasingly common. January figures indicate revolving credit, which is largely credit card debt, was up a shocking 6.4 percent over the previous year.

By relying on credit cards for spending, Americans are racking up large bills. At 14.5 percent of after-tax income, the current debt burden that consumers are staring down is the highest on record.

And since interest rates on credit cards average more than 13 percent, this kind of debt can be extremely dangerous. As the real estate market slows, the effect on consumer spending - and debt - is undeniable.

According to Business Week, consumers are, at least in part, turning to their credit cards instead of a home equity line of credit to maintain their standard of living now that housing prices have stopped soaring.

In the past, when home prices were rising many consumers became dependent upon Florida home equity loan extractions to fund home improvements, major big-ticket items, or even day-to-day life.

For now, it appears most consumers are handling the extra debt. However, if the economy slows there will be trouble - especially if people don’t think over debt consolidation mortgage options. Soon.

“If wage income grows enough to offset increased debt, then consumers will be fine,” says Goldman Sachs senior economist Ed McKelvey.

However, betting on continued wage growth might be risky. The power of the job market and the economy in general pivots largely on the housing market — and evidence suggests that despite low Florida mortgage costs, the real estate climate will remain sluggish for some time.

SOURCE: The Trumpet