CONSUMER NEWS    RECALLS    COMPLAINT FORM    SCAM ALERTS  
Small Claims Guide   Class Actions   Lemon Laws   FAQ   Newsletters  


Complain about a product or service

Automotive    Education    Electronics    Family    Finance    Health    Homeowners    Shopping    Travel   
NEWS   Latest |  Archives |  Auto |  Cells, etc. |  Computers |  Financial |  Health |  Homeowners |  Parents |  Privacy |  Scams |  Seniors |  Travel

Adjustable Rate Mortgage Payments Headed Up in 2006



By Mark Huffman
ConsumerAffairs.com

January 12, 2006

Living in a Bubble?
Mortgage Crisis? Act Now to Avoid Foreclosure
Avoiding Foreclosure Takes More Than Hope
---
Mortgage Applications Surged 112 Percent Last Week
GAO Calls for Better Bailout Oversight
Homes Lose More Value In Third Quarter
Home Prices Post Record Decline
Fed Throws $800 Billion Lifeline to Consumers
Existing Home Sales Drop in October
When in Doubt, Leave Nothing Out
Fannie Mae and Freddie Mac Suspend Foreclosures
Consumer Prices Plunge in October
Paulson Rejects Bailout Money for Detroit
Another Glimmer of Hope in The Housing Market
Buyers' Beware Market
FDIC Backs More Aggressive Loan Modification Plan
Housing 2009 Forecasts Mixed, But Mostly Grim
Foreclosures Up Five Percent in October
Feds Shift Gears On Bailout, Puts Focus On Consumers
More Homeowners Under Water in Third Quarter
Feds Mount New Effort to Help Struggling Homeowners
Lenders Embrace Workouts for Struggling Homeowners
Obama Can't Quickly Raise Homebuyers' Hopes
At Last: Bailout Trickling Down to Struggling Homeowners
New Home Sales Rise in September
How to Appeal Your Property Tax Bill
Existing Home Sales Rise in September
Administration Considers More Help for Homeowners
Foreclosure Activity Drops in September
Southern California Home Sales Surge 65 Percent in September
HOEPA: New Hope for Outlawing Abusive Mortgages
FDIC Chief: Not Enough Help for Homeowners
---
More ...

Consumers holding adjustable rate mortgages could face significant increases in their payments this year. In fact, one mortgage planner warns that homeowners who locked in rates of around three percent in the early years of their ARMs could see their mortgage payments double once the rate is adjusted to current market conditions.

"You're seeing fixed rates at six and a half and seven percent, while some of the ARMS were available at very low levels. Now you're seeing some of these adjustable mortgages go up three or four points," Paul Harden, a broker with iLendingPro, of Cypress, California, told ConsumerAffairs.com.

What's behind the jump?

Mortgage rates are going up, and it has less to do with the Federal Reserve hiking the Fed Funds Rate than it does the bond market. Interest rates on bonds are up, and that influences mortgage rates.

"Our current market reflects the reaction of investors reading between the lines on comments made by the Fed, and mortgage interest rates are going up," Harden said.

"This will affect home owners with adjustable rate mortgages (ARMs) tied to indexes that are based on short-term interest rates. This includes the 11th District Cost of Funds, 12-Month Treasury Average (MTA), London Inter Bank Offering Rates (LIBOR) and others."

This doesn't mean that everyone with an adjustable mortgage is in trouble right away.

Harden says some indexes are more volatile than others. But he says consumers should remember, when an ARM adjusts, the new interest rate is a sum of the borrower's fixed margin plus the current rate of the index the mortgage is tied to. In the present environment, he says that can be a big number.

"Many of these people who locked in very low rates with ARMs are now going to see their interest rates double in some cases," Hardin said.

Those hardest hit are likely to be the consumers who chose ARMs because they offered the only monthly payment they could afford. Harden says many people were encouraged to buy more house than they could afford through the growth of "creative" financing options.

"Even ten years ago your debt to income ratio on a standard loan needed to be about 30 to 35 percent. Now banks, in order to get more people into homes, are taking up to 50 and 55 percent debt to income ratio. That's a recipe for disaster," he said.

Harden says consumers with ARMs should be thinking about locking into a fixed rate loan before rates go up, even though the fixed rate will be higher than what they're paying now. Those who took out an ARM because of a poor credit score may now be able to transition into a loan with more favorable terms, if they have improved their credit rating.

Before doing anything, though, he says it's a good idea to seek some solid advice from someone you trust -- an independent mortgage broker, accountant, financial advisor or attorney.

"As with any decision to refinance, it is important to take the terms of the existing loan, the cost of the new loan, and the borrower's long-term needs into consideration."



Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.


Consumer News

December 5 2008

Recent Recalls & Safety Alerts

PRINT, MAIL, ETC.


FREE CONSUMER NEWSLETTERS

The Daily Consumer
Afternoons M-F

Sign up now!


Consumer News & Alerts
Every Sunday

Sign up now!

MOST-VIEWED PAGES

  • Sharper Image
  • Sears Auto Centers
  • GE Money Bank
  • Maytag Washers
  • Speed Up Your Metabolism
  • Capital One
  • 7 Falling Price Tags
  • Wal-Mart Vision Centers
  • Whirlpool Water Heaters
  • Kirby Vacuum Cleaners
  • NEW COMPLAINTS

  • Ann Taylor
  • Taxslayer.com
  • EyeSave.com
  • Broadway Photo
  • Greatknivesgreatprices
  • Hydroderm
  • Magicjack.com
  • Justmyshopping.com
  • Papa John's
  • Privacy Matters
  • Hey there! ConsumerAffairs.com is using Twitter.
    Twitter is a free service that lets you keep in touch throughout the day. Join today to start receiving ConsumerAffairs.com's updates.

    JOIN OUR SITE

    Joining lets you post comments and, soon, chat with your friends without leaving our site.



    Back to the top |

    Advertisement



    AUTOMOTIVE
    • Dealers
    • Manufacturers
    • Service
    • Extended Warranties
    • Lemon Laws
    • Recalls
    • Tires
    • Transporters

    FAMILY
    • Aging
    • Children, Parenting
    • Recalls
    • Dating
    • Education
    • Entertainment
    • Pets
    • Weddings
    FINANCE
    • Annuities
    • Banks
    • Credit Cards
    • Debt Collection
    • Debt Counseling
    • Insurance
    • Investing
    • Loans
    • Mortgages
    • Payday Loans
    • Student Loans
    • Tax Prep

    HEALTH
    • Drugs, Pharmacies
    • Health Clubs
    • Hearing Care
    • Hospitals
    • Nursing Homes
    • Nutrition, Diets
    • Vision Care
    • Weight Loss
    HOMEOWNERS & RENTERS
    • Appliances
    • Cookware
    • Furniture
    • Home Improvements
    • Lawn & Garden
    • Movers
    • Pools & Spas
    • Realtors, Rental Agents
    • Recalls
    • Utilities

    ELECTRONICS
    • Cable TV/DBS
    • Cameras
    • Cell Phones
    • Computers
    • Home Electronics
    • Internet Access
    • Local Phone Service
    • Long Distance
    • VoIP
    SHOPPING
    • In-Home
    • Online
    • Retail Stores
    • Sporting Goods
    • Supermarkets
    • Telemarketers

    TRAVEL
    • Airlines
    • Bus Lines
    • Car Rental
    • Cruises
    • Hotels
    • Travel Agents
    • Trains

    RESOURCES
    • Class Actions
    • Complaint Form
    • Small Claims Guide
    • Lemon Laws
    CONSUMER NEWS
    • Latest News
    • Automotive
    • Telecom
    • Financial
    • Health
    • Homeowners
    • Scams
    • Seniors
    • Travel
    • More ...

    RECALLS
    • Automotive
    • Children's Products
    • Drugs
    • Food
    • Household Products
    • Sporting Goods

    ABOUT US
    • FAQ
    • Privacy Policy
    • Advertise With Us
    • Newsroom
    • Syndication
    • Terms of Use

    Terms of Use Your use of this site constitutes acceptance of the Terms of Use

    Advertisements on this site are placed and controlled by outside advertising networks. ConsumerAffairs.com does not evaluate or endorse the products and services advertised. See the FAQ for more information.

    Company Response Welcome If complaints about your company appear on our site, we welcome your response. Please see the Response Form for more information.

    For more information, see the FAQ and privacy policy. The information on this Web site is general in nature and is not intended as a substitute for competent legal advice.  ConsumerAffairs.com Inc. makes no representation as to the accuracy of the information herein provided and assumes no liability for any damages or loss arising from the use thereof. 

    Copyright © 2003-2008 ConsumerAffairs.com Inc.  All Rights Reserved.    The contents of this site may not be republished, reprinted, rewritten or recirculated without written permission.