I Want to Refinance an Option ARM Home Loan
August 26th, 2009Option adjustable rate mortgages (ARM) home loans were very popular just a few years ago. That’s because they gave borrowers the ability to decide how large of a mortgage payment they would make each month. Sounds crazy, huh? Let’s take a closer look at these mortgage loans and why it makes sense for you to refinance one—if you can.
Why These Mortgage Loans Are Trouble with a Capital “T”
Mortgage lenders stopped offering option ARMs last year. But the demand for option ARMs resulted in $750 billion of the loans being underwritten from 2004 to 2007, according to Inside Mortgage Finance newsletter. More than half a million of these mortgages are scheduled to reset over the next four years. Many homeowners who have these loans are subject to mortgage rates that can rise and push up their payments to astronomical amounts. As a result, default and foreclosure rates for option ARMs have already surpassed those for subprime mortgages. Read the rest of this entry »