October sets record for ARMs adjusting

October sets record for ARMs adjusting
Oct 19, 2007, 1:07 pm PDT
News provided by Quicken loans
According to CNNMoney.com, $50 billion in adjustable rate mortgages will reset in October 2007, driving interest rates up. Some may jump as much as 50%.
The record amount of resets and rising foreclosure rate has gotten a lot of attention. Congress and the White House both have proposals in to lighten the burden of those faced with foreclosure. However, any relief action as a result is unlikely to take place before October's record round of resets pushes through.
There is also much talk that loan servicers may move toward giving ARM borrowers extra time at their current payments, allowing preparation for the impending adjustment and for the housing market to catch up. Unpaid interest could then be rolled back into the loan and the homeowner could potentially refinance to a fixed rate, saving their loan, their credit and their home.
While October will be the peak month for resetting ARMs in 2007, new records will be set in early 2008; March will see more than $100 billion in resetting loans. Those facing adjustment in the next 18 months should consider a refinance as soon as possible, while 30 year fixed rates are still at historical lows.
Anyone with a mortgage that will adjust really needs to look at the terms of their loan and understand how much the payment and rate could change. Speak with a mortgage professional to see if refinancing is a good option. A simple phone call could save a lot of money and stress!
This article is reprinted by permission from Quicken Loans © 2007 Quicken Loans Inc. All rights reserved.