Adjustable Rate Mortgages are Starting to Adjust Upwards
Many experts point to the housing boom as having started about five years ago. One of the factors leading to the boom was the availability of adjustable rate mortgages (ARMs). These loans allowed homeowners to enjoy several years of low mortgage payments. Many of the ARMs had five year locked rates and are just now starting to adjust upwards. For some, this will mean significantly higher mortgage payments and, unfortunately, the number of foreclosures will increase.
Surprisingly, many people do not know they have ARMs, so the increased mortgage payments will come as a rude shock. If you were not aware you had an ARM, or if you are not sure when the rate adjustment is supposed to kick in, check the paperwork you received when you took on the mortgage to make sure you received all the proper disclosures.