An article in USA Today reports that Americans that are behind on their mortgage payments is up 4.7%. Some of the blame is put on adjustable rate mortgages, Hurricane Katrina, and car and steel factories shutting down. The last two are unavoidable, but buying an ARM on your house is DEFINITELY avoidable.
Adjustable rate mortgages were a creative way to make people think that they could afford a house that they really could not afford during the housing boom. Well folks, the housing boom is over. It’s not crashing, but it is definitely cooling off like a stale cup of coffee at eleven in the morning. The housing market is turning into a buyer’s market, and interest rates are slowing rising back to normal levels. If you have an ARM on your house, strongly reconsider refinancing it. Do not let the penalties or points that it costs to refinance deter you from getting a fixed rate mortgage. Believe me, paying 4 or 5 grand now will be much better than paying 20 or 25 grand more over the life of the loan.