I was reading this morning that the government estimates that at least 2/3 of the adjustable rate mortgages (ARM's) in this nation set to readjust are exotic loans with low teaser rates. Further, a lot of these loans are above the FHA limit of $367,000. One statistic I read was even higher; 81% of loans set to readjust are exotic or "low teaser rate" loans.
What does this all mean? It means that there is relief for approximately 20-30% of the homeowners with ARM's set to adjust. Obviously, that's the good news. The sobering news is for the rest of you. If you have an ARM set to readjust in the next year, don't wait until the last minute. Start doing your homework now! If the government can't help, call your lender. They may be willing to work with you and reset your mortgage. Keep in mind, though, that you want to be current on all your payments. It's all about risk these days.
If you're in a tough situation right now, take action or someone else will. And I would argue no one wants to get foreclosed on. Not only is it embarassing but it will ruin your credit score (typically a 250 point drop). If you need to sell, admit it and get your home on the market today. Remember it's a soft market out there and homes are often taking months to sell.
Long term, I believe it means we're still in for a rough ride. Obviously, the market is contracting and probably will continue to do so into the next year. Good luck to all of you! Things will eventually turn around; it's just going to take a little time. Enjoy your weekend.
Paul
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