Posted on 09/05/2006 2:01:48 PM PDT by ex-Texan
With millions of adjustable-rate mortgages about to reset this fall, experts expect a wave of foreclosures by Americans in every income bracket. Here's why they could soar in late 2006 and beyond:
Those easy-mortgage chickens are coming home to roost.
This fall the adjustable-rate mortgages (ARMs) that millions of Americans took out during the recent housing boom will be reset, and many homeowners will see their monthly mortgage payments shoot up by as much as 20%. According to the Mortgage Bankers Association, of all mortgages financed in 2005, 36% were ARMs -- the highest ever.
This is a matter of concern because ARMs are typically initially made at a lower rate and then increase after a fixed period of time, usually one, three, five, seven or 10 years, after which the rate will more closely reflect current rates. As interest rates increase, mortgage payments increase. Between $400 billion and $500 billion in ARMs are due to be reset by the end of 2006. The following year will be even more dramatic, when more than $1.5 trillion will be reset.
For many Americans, this is scary news, if hardly unexpected. * * * [M]any of them are finding themselves stuck in a house they may soon no longer be able to afford, and, as the real estate market peters out, there's little they can do about it. * * *
Unprecedented situation:
* * * A major concern is that the number of ARMs issued at subprime rates to borrowers with lower credit ratings is not known. "We know that ARMs default at a higher rate than fixed, and subprimes default at higher rates than primes," says Sharga. "Never have so many ARMs reset at the same time. There is no precedent for it."
(Excerpt) Read more at realestate.msn.com ...
I'd stay close to the ocean.
Realize though that if this happens to the scale people "hope" for the lenders will severly tighten up their policies to way over in the other direction (way too restrictive instead of way too lenient) and you might not be able to buy at all except with cash.
Anyone that elected an ARM vs. fixed over the past 12 years has come out way ahead.
He's pimping his website.
Kerry's "Misery Index" Accentuates the Negative Kerry invents a new "Misery Index."
Long Beach California?
Builds character or something...
Long Beach California?
LOL!!! At least in Texas, millions of homeowners will be breathing a bit easier, as our utility bills will have fallen by at least $300/month (closer to $400 for me). This has been a much warmer summer than normal (Bush's fault), and our utility bills reflect that. It's put a strain on our budget, notwithstanding $3/gal gas.
That extra cash will be redeployed to savings, and getting caught up on other bills.
What I'm really looking forward to is next September, when my youngest heads off to kindergarten. My daycare bill will decline by about $600/month. It will come in handy, as my two other kids will be in college!
Whoever said children are an investment doesn't know squat about accounting! They're a #$#%#%@#$#@ expense (but I love them dearly!).
If they had common sense in handling money they probably wouldn’t be Demonrats would they?
For years and several times a day, recycling old articles, if necessary. Whatever it takes.
I knew going in that there was virtually no chance of not being able to sell my house. It is in a good school district and falls in the $100k price range, which around here means it will sell inside of a month no matter where the economy takes us.
The main point I am making is that not everybody with an ARM is unwise or in dire straits. For some of us, it was a sensible move that continues to work to our advantage.
At least half the condos in the new beachfront buildings here in South Florida seem to be vacant. People either didn't buy them or investors bought them with the intention of flipping them but with nobody to flip to. Sometimes you can go to the beach and the condos have hot chix walking around advertising condo sales. Problem is that right now few are buying and many are waiting.
can you give me some ideas?
I'll leave Californistan in a minute (though I will miss the weather)
"Most will simply lock in a rate which at this time is about 5 1/2%"
I went to http://www.bankrate.com and checked rates for 30 year conventional ... Hartland has 5.25% with two points and $2,900.00 in fees. You can get 5.5% all day long, from a variety of sources, with one point origination. Even if you don't have much to pay upfront, you can still get 5.875% from Priceline Mortgage, with no points at all, and $690.00 in fees. Even the big banks are below 6%.
Just watch. I am willing to bet that the "solution" to the ARM mess will be conversion of 30 yr ARM's to 40-45 year fixed's.
But . . . but . . . I was told we're all doomed.
Aren't we all doomed?
Why can't we all be doomed?
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