According to CoreLogic, nearly 300,000 subprime adjustable-rate mortgages (ARMs) were scheduled to reset throughout the summer months of 2008. For many borrowers, this meant higher monthly mortgage payments with a rate increase of 1 or 2 percentage points – or more in some cases – when their loan adjusts.
However, the peak month for the resetting of mortgages came this month (October) when, according to Credit Suisse, more than $50 billion in mortgages are scheduled to adjust to a new rate for the first time. If you or someone you know has an ARM, be proactive. Find out how much your payments will increase before your loan adjusts this fall.
Remember, while interest rate cuts from the Federal Reserve over the last year will definitely help some borrowers, many others could have trouble making increased monthly payments with food and fuel costs on the rise – especially if the Fed begins increasing its key interest
rates in order to fight inflation.
It's also important to note that credit guidelines have tightened dramatically in the last year or so, and it may be harder for you qualify for a fixed-rate product if we don't have enough time to address certain credit issues. So don't continue to wait if you have already. Give us a call today. We'll review your adjustable-rate mortgage with you and see what's best for your individual goals and needs.
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