• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!

Can Option ARMs Bear the Weight of Interest Rates?

In a previous post, we talked about our concerns regarding the number of families in 2010 that were going to have their Option ARM mortgages resetting or recasting. The term ‘reset’ deals with the change of interest rate. The term ‘recast’ deals with the actual change in the mortgage amount. In either case their mortgage payment could be affected.  And at a time of tremendous financial hardship, many families’ mortgage payments could increase… some of them rather dramatically.

Why will this be a challenge in 2010?

We only have to look at the chart below to see that many loans will be impacted over this year and next:

This will be an ongoing concern in 2010.  SNL reported recently a quote from Greg McBride, senior financial analyst at Bankrate.com:

“The avoidable scenario is interest rates start to go up over the next couple of years, and all of a sudden, millions of homeowners who are stuck in adjustable rate mortgages and haven’t been able to refinance out of them become sitting ducks for big payment increases. And then here we go again. It’s like 2007 all over again.”

Will this be a challenge in my state?

Here is a graph showing the percentage of Option ARMs in each state. The darker blue your state is the higher the percentage.

What does this mean to you?

Again we are talking about an increased number of people who will have difficulty paying their mortgage. That will lead to an increase in housing industry as these families are either forced to sell or lose their home to the bank. Any increase in housing inventory will have an impact on pricing.

Members: Sign in now to set up your Personalized Posts & start sharing today!

Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts.

3 replies
  1. Susannah
    Susannah says:

    Painting your house prior too listing it for sale is an easy way to give it a
    makeover so it looks fresh and modern. Whenn you decfide to paint your home you might want
    too give it some thought or even decide to hire a skilled house painter Phoenix Arizona.
    Even children can crdate gifts with thi simple project.

  2. Akilah
    Akilah says:

    You can put the money in the bank until the appropriate time you’ll be sending the kids off
    to college. Therefore, it is advisable to put at least
    20% down on your mortgage. As per the rules and regulation of all the home
    loan lenders, depending on thee income, eligibility and repayment capacity, the borrowers can get the loan amount.

  3. australian mortgage
    australian mortgage says:

    For homeowners who are not severely underwater or for those owners who do not have significantly upsidedown mortgages these mortgage refinance options may be the best way to go or at least try.
    However, if you have things like a judgment, delinquent student loans or tax liens then you will have to clear these up before you wkll be able to get approval. At this point, the loan process has officially begun.


Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *