When an adjustable-rate mortgage (ARM) resets, it suddenly raises monthly payments. This phenomenon is fueling the foreclosure crisis. As real estate prices fall and home equity vanishes, those who hold volatile and risky ARM and Option ARM loans may find themselves owing more than their houses are actually worth.
It seems the inevitable approaches for the US government and its "supported entities" Fannie Mae and Freddie Mac. Both, moving in tight alignment, have lost over 60% of their market value in the preceding 30 days. Hovering dangerously between $3-$5 a share. Something is certain to break.
The lessons of the subprime mortgage crisis are obvious: If you have an adjustable-rate mortgage, refinancing to a fixed-rate home loan is a smart move. The sooner you act, the less likely you'll get caught between rising interest rates and declining home values.
One of the disturbing things that came to light during recent investigations into the credit crisis is that lenders often overcharge consumers when they take out mortgages or home equity loans. Before applying for a loan, know what closing costs to expect and how to reduce or avoid them, if possible.
The Home Ownership and Equity Protection Act targets predatory lending practices.
A mortgage is the biggest investment most people will ever make. If you're going to use a mortgage broker for such an important transaction, be sure that you're working with the best. Here are some distinctive traits of the top mortgage brokers.