Time to Lock-In That Fixed Rate Home Loan
Throughout the rest of this year and next year there are an estimated $1.4 trillion, yes that's trillion with a "t", in adjustable-rate mortgages (ARMs) that will be reset.
This means that those hooked by an initial lower rate for a shorter fixed term such as 3 or 5 years will now become 1-year adjustable mortgages for the remainder of their 30-year term.
Adjustable-rate mortgages helped many families afford homeownership and provided interest savings for those moving within the fixed-term period.
Unfortunately with the gradual rise of the Fed prime rate from 4.25% up to the present 8.25% over the last few years, those that still hold their ARM in place now face a much higher payment due to the present mortgage interest rate environment.
At the same time, predatory brokers that convinced home buyers to take advantage of "Option ARM" loans, which require interest-only payments even interest payments lower than the typical minimum amount due.
This lead to negative amortization, which is an increase in the loan's principal balance, along with leveling-off to declining home values, put homeowners into inescapable and unaffordable ever increasing payments without the equity to refinance.
The U.S. government has agreed to help bailout many homeowners in this predicament by offering government backed mortgage loans, which are offered by designated, reputable lenders and mortgage bankers.
With foreclosures rampant, tightening lending practices, adjustable-rate mortgages resetting, and fixed mortgage interest rates still at 30-year lows, it is time to lock-in that fixed rated home loan whether you are in the market to purchase or refinance.
Disclaimer:
A recommendation and/or editorial, which you are free to accept or reject, is not a guarantee for the successful performance of an investment, and we are expressly prohibited from guaranteeing accounts against losses arising from market conditions. Past performance is no guarantee of future results, and current performance may be lower or higher than the performance data quoted.
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