Mortgage Modifications Gone Bad...

By
Real Estate Agent with Comey & Shepherd Realtors

Story after story talks about how homeowners, who are attempting to modify their adjustable interest rate home loans to lower their payments, are now watching their monthly payments skyrocket.  

Please don't get an adjustable rate mortgage (A.R.M.)!  

I just read a story about a couple in AZ with a $550,000 home and they are trying to get a loan modification, because their interest rate is going to adjust (UP) to over $1,000 more per month.  Most Americans cannot afford a jump in monthly payment like that.  

When you are looking to purchase a home, only apply for a fixed interest rate mortgage.  An ARM will only hurt you in the long run.  If you have to get an ARM to buy a home, don't buy it! ARMs are only a viable option for very few homeowners, yet during the years of 2003 - 2007 in a hot seller's market, many people got ARMs, because that was the only way to afford the home they wanted.  

Now I'm not here to place blame.  There's enough to go around for everyone, but the fact of the matter is if you can't comfortably qualify for a 30 year fixed rate mortgage on a home that you want, then you need to move down in price.  The Financial Peace University Guy, Dave Ramsey, even talks about only taking out a 15 year mortgage.  

You also need to remember that your total mortgage payment of PITI (principal, interest, property taxes & homeowners insurance) will go up from time to time, because even though your principal and interest are fixed, your taxes & insurance will increase over time.  

So, when deciding on how much home you want to buy, make sure that you review your housing goals, stay within a comfort range for your monthly payment and don't buy a home that will keep you home all the time, because you won't have any money left over to enjoy life.

At your service,

Dan

What questions do you have? I'll gladly answer them at: dan@danweis.com.

Are you a first-time home buyer?  Attend our Free First-Time Home & Condo Buyer Class.  For details and upcoming class dates, go to: http://www.HomeBuyingClass.com

Are you ready to find your dream home? Contact me for a Free Home Buyer Consultation at: (513) 615-1890 or dan@danweis.com No cost...No obligation...No sales pressure!

 

Posted by

Dan Weis
Real Estate Consultant since 1985
Comey & Shepherd Realtors

Cell/Text: 513.615.1890
dan@danweis.com
www.CincinnatiRealEstateGuy.com

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Rainmaker
76,436
Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

Those arms are tough!  Hope they get it figured out!

Sep 15, 2009 04:59 AM #1
Rainmaker
2,917,406
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Dan: Great advice. People really need to get back to living within their ability to afford what they want or even need. Denial play a big part … we all want to believe we will find a way … it will be OK … etc. Thanks for your post.

Sep 15, 2009 05:04 AM #2
Rainmaker
635,598
Leesa Finley
RED Properties - Wake Forest, NC
RED Properties - Raleigh NC Real Estate

Wonderful post, Dan!  This is a great reminder for those about to purchase a home - ARMs can be deadly if people don't think ahead!

Sep 16, 2009 01:47 AM #3
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Dan Weis

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