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What's Become Of The ARMs (Home Loans) Race?
When Naperville homeowners stand back and survey the Big Picture of how home loans are being applied for nationally, they are seeing a pretty predictable landscape. For the first week in August, the Mortgage Bankers Association (they survey three-quarters of all home loans) tells us that applications were up a bit (.2%); 63% of them were refinances; and that interest rates rose a few hundredths of a percent.
But what, one might wonder, has become of the ARMs race? During the height of the real estate boom, Adjustable Rate Mortgages were all the rage. With property values seemingly permanently on the rise, it made sense to assume that when the time came for the low introductory rate to adjust upward, any homeowner could simply refinance (probably into another low-interest ARM).
Now that fixed-rate home loans’ interest rates are increasing, you might assume that ARM loans would become popular once more. Not necessarily: “ARM share of activity remained constant at 6% of total applications,” reported the Mortgage Bankers Association. This while the HARP (Homeowners Affordable Refinance Program) share of refi applications was attracting six times that many. Why is this newsworthy for people looking to buy a home in Naperville? It probably ... more
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