Not sure I am sympathetic, the family wrote the ad ‘everything must go, free’, really what did they expect.
I have had ads on craigslist for free stuff and I always put just the street name and WHATS IN THE DRIVEWAY AT THE CURB ONLY, with sign.
On article said some people have brought stuff back, I am still baffled how after 20 years they lost the house, wouldn’t the mortgage payments be really low or at least way lower than rent.
You caught that, too. It doesn't make any sense. But then why anyone would get a mortgage longer than 15 years doesn't make any sense either. They'd have been free and clear for 5 years. Even a 20 year mortgage would have been paid off. Why not have a paying yard sale? Did they previously? It doesn't sound like it or they'd know that people show up before dawn. By 10 AM the good stuff is already gone. I'm curious what they did to try to save their house.
First, in a thirty-year fixed mortgage, the payments do not get really low. They stay the same size, but the percent of the loan that's devoted to the principal and the interest change over the years. That's what's meant by "amortization." The initial payments are almost 100% interest (+ property tax + homeowner's insurance) and over the course of thirty years the amount of principal in the payment increases while the amount of interest decreases, but the payment size remains steady.
This means that the portion of the payment that's tax-deductible decreases over time. Total payment may go up or down due to changes in property taxes or homeowner's insurance, but that's not part of the loan; the lenders just collect those charges to protect themselves.
Yes, the mortgage payments may well be less than rent. That makes the loss of a home doubly awful. For some families, if they can't afford the mortgage payment they certainly can't afford the rent on a modest apartment. And if they've been foreclosed on, their credit is shot so they can't rent a decent apartment.
Third, you don't have to max out your equity with home equity loans or buy too much house or do anything else stupid to get in trouble. Just lose your job, fall a few months behind on the loan, and the mortgage lender will come after you. You can't refinance if you've lost your job, and you won't qualify for the lovely Obama "Making Home Affordable" program unless you're underwater on your loan. Depending on the time of year, the location and condition of your house, and the local market, you might not be able to sell before they kick you out. Once they start the process, you practically have to win the lottery to keep the house, because they want the whole arrears plus penalties, late fees, punishments, extra charges, and other fees.
This has happened to a lot of responsible people in the past four years. You don't need to be a deadbeat to get in serious trouble. In the current economic climate, one piece of bad luck can put you in danger and two pieces can put you over the edge.