Upcoming Foreclosures

I don't understand all the foreclosures because of an ARM. Aren't people able to refinance their home and ?

keep it at a lower rate they can afford? I am concerned about how this works because we have an ARM loan that expires in 2010 and I don't want to be surprised with the fact that we won't be able to refinance for some reason. If someone could explain to me how this works, I would really appreciate it. Also, is it best to refinance, or to sell and get another home...or does it matter? If it was people with not so good credit getting the ARM loans, then I am not understanding why we didn't get a better loan. Our credit score was about 694. Maybe that's not good enough for a regular loan. I will call a different mortgage lender and see what they say.

Public Comments

1. Some people are not able to refinance because now suddenly banks are being more careful about who they give loans out to. If you have bad credit and want to refinance you might not be able to or they might not offer you a good rate (one that would bring your payment down). Banks are also requiring large deposits now that they did not require before, many people who want to buy a home are required to put 10-20% down. If you want to refinance you might want to talk to your mortgage broker now instead of waiting 2 more years, if you find out now what you will need to refinance in 2 years you will be able to prepare.
2. When the crisis is over (give it a year) then you should try to refinance. You CAN try to refinance now if you have wonderful credit.
3. you need to be concerned, because you have way oversimplified the process. if your equity is sufficient to refinance, and you have the credit scores and the income to refinance, than you're golden. problem is, that is not the case for an increasing number of americans. say, for example, you bought your home for 350k back in 2004. as a result of the crisis, it is not worth 250k (every market is different and these numbers are just for show). even if you had put down a 10 percent down payment, there is a real chance that you could owe more on the loan than the home is worth (especially if you have an ARM). that being the case, you would not be able to refinance, as there is no way that the original financier would release the lien on the home for a substantial loss. the catch 22 is that if you fail to be able to refinance, than your interest rate could skyrocket in a relatively short time, which in some cases could make your payment rise drastically. with an ARM, you are at the mercy of the market. although there are often yearly caps on rate increases, that will be no solace as you were used to paying 1200 a month for mortgage, and now you are paying 1800. this is why people have the problems with ARMs. i would talk to your mortgage company right now and check about the possibility of refinancing. do this now, while you still have some time.
4. Many people are unable to refinance because the house is not worth less than they owe on the original morgage. When you try and refinance they will assess the value of the house at that time and will not give you a morgage for more than 80-90% of that amount.
5. 1. most ARM's had lo intro % interest, sumtimes 0%. Aft yeer or 2, rate go tu market rate. Sumtimes monthly paement go up 150%. 2. folks got ARM kauz em dont qualify for regular fixed rate lone. Em dont hav much munee & kredit skore is lo. 3. This yeer, interest rates go up after 2 yeers with % interest neer the loest in 50 yeers. Wen rates go up, yu gotta pae more evree month. 4. Many was flat-out not suited tu bi a hous...not redy emoshunally, dont hav regular job, hav long histree av not be responsabel, inkum 2 lo tu bi a hous,.... ------- refinans 1. Tu refinans, yu gotta hav equity...hous "value" > $ yu oe on morgage. Many houses bied in 2005-07 R underwater= kant sell it kauz yu oe more than yu kood get if yu sell it. 2. a lotta ARM's forbid yu pae off lone in first 5 yeers or so. A refinans pae off old lone & get nu 1. 3. in normal times, refinans make sens oenlee if % interest is less than wot yu pae now. Last fyu months interest rates go up. With this termoil, most thank it will keep going up over next 2 yeers.
6. The reason many people got ARMS was because they saw they were lower than fixed and everyone "knew" the values would rise and rise and their income would be going up and everything would be fine. Many of those people over-bought and borrowed the maximum possible then. You CHOSE an ARM because it was a couple points lower to begin with than a fixed. You may have been steered into it by a broker or agent because they were getting a commission, but it was your choice. All ARMS are different. So, fully understand all the fine print of yours and check around to see your options.
7. You may be pleasantly surprised when your 2010 ARM adjusts down. That may happen. Don't be in a rush to refinance..