Millionaires Default On Their Mortgages More

Even millionaires these days are having a hard time getting their hands on money.

Even if those millionaires want to refinance their home to put their money elsewhere they are having a hard time finding a lender that will loan out that money even if they have some equity.  Even if they have six-figure incomes, exceptional credit scores, and tons of assets, they are still getting turned down for loans.

“It’s amazing really,” said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., “but it makes sense when you think about it.”

One reason is that many people considered “rich” have fallen behind on their loans. Over 12% of mortgages in the United States over the $1 million loan amount were actually late during this past fall. This 12% is twice the rate of loans that are under $250,000 and almost triple the number of mortgages in the million-dollar range from only 12 months ago. So, even the rich are having a hard time making their mortgage payments.

I think we are running into one of those scenarios where homes over $1 million have depreciated at a much higher percentage rate than starter homes. How would you like it if your home was once worth $2 million, and now is worth $1 million? That’s a big chunk of change that most likely makes people in that scenario not want to make their mortgage payments even though they may have enough money to make the payments.

Not to mention, that jumbo loans are harder to qualify for and obtain financing for than traditional conventional or FHA loans. When you throw the default rates into the mix, you can see why lenders are a little bit apprehensive about making these large loans.