The mortgage industry is expected to see $112 billion in losses over the next 6 years due mainly to mortgages that are adjustable. Many of these loans had attractive low fixed rates for a short period but once that period expires the adjustment can leave homeowners with a much higher payment that is simply unaffordable.
The most common of these would be known as 2/28 or 3/27 ARM’s. These loans provided a rate lower that a 30 year fixed but for either 2 or 3 years. At the end of that period the rate adjustment is dramatic and many homeowners are not prepared for it.
Combine this payment shock with the stagnant real estate market and there is a certain problem on the horizon for those whose homes did not appreciate enough to qualify under the new lending guidelines. Many of the lenders have done away with 100% financing unless you have near perfect credit and at subprime rates which usually will not help the payment shock much.
If you have one of these loans you need to start preparing your credit profile well in advance of the first adjustment. If you have already received a notice from the lender indicating your adjustment is next month I suggest moving quickly. Feel free to contact me and I will be happy to help guide you in the right direction.
The article is presented by
Smilena Ivanova,
Mortgage Planner
Infinity Mortgage Group, 602.357.4330, ext.3
Smilena Ivanova,
Mortgage Planner
Infinity Mortgage Group,
