There are hundreds of thousands of American homeowners losing their homes due to the resetting of ARM loans resulting in higher monthly mortgage payments.
Belleair Bluffs Fl – House Buyers: If you are one of the home buyers that took on an ARM, you may be experiencing a rise in your mortgage payment. The Adjustable Rate Mortgages were designed to get buyers into a house with a low down and a low starting interest rate, which kept the monthly payments affordable. The trouble begins when the interest rates reset and go up instead of down. Every percentage point of interest rate represents a big jump in the amount of the homeowner’s monthly payment. Many homeowners are now struggling to keep up with a once affordable payment that they did not expect.
ARMs can be attractive when you really want to buy a house and the initial terms look like something you can afford. The danger is that the cost can go up or down, and they rarely drop when the interest rates go down. In this economy, the interest rates have only risen, leaving hundreds of thousands unable to pay their new mortgage payments once the new rates kick in.
With the economy making it difficult to make ends meet, some homeowners are finding that they can’t afford their homes any longer with the new payments they must make. In this case, you can try to refinance the loan or decide to sell the house before you get into missed payments and the threat of foreclosure. Defaulting on a home loan can ruin your credit for many years, so that shouldn’t be an option. These days you need credit for everything from applying for a job to buying medical insurance.
If you do refinance, by all means, look for a lender that will give you a fixed rate mortgage. This means that your payment will be the same over the life of the loan no matter how long your contract lasts. If you cannot refinance the loan for a fixed rate mortgage you might want to consider selling the house. Selling will allow you to then find a home that better matches your current financial restraints and you’ll also be applying for a new loan. The old ARM will be paid off with the sale of your house. Again, when you buy another home, be certain to get a fixed rate mortgage.
- The trouble begins when the interest rates reset and go up instead of down. Every percentage point of interest rate represents a big jump in the amount of the homeowner’s monthly payment.
- Defaulting on a home loan can ruin your credit for many years, so that shouldn’t be an option.
- If you do refinance, by all means, look for a lender that will give you a fixed rate mortgage.
ARMs can be attractive when you really want to buy a house and the initial terms look like something you can afford. The danger is that the cost can go up or down, and they rarely drop when the interest rates go down. In this economy, the interest rates have only risen, leaving hundreds of thousands unable to pay their new mortgage payments once the new rates kick in. Be patient and wait for a good loan and a house that you can afford. You’ll be better able to budget for your house payments when you know what they will be without a doubt.
