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Adjustable rate mortgages on the rise again in Palm Harbor

One of the casualties of the real estate market “collapse” was the adjustable rate mortgage. ARMs were hugely popular just a few years ago, when home prices were at their highest and borrowing cheap money was easy. But many home buyers went back to the sensible old 30-year fixed-rate home mortgage when more conservative financing seemed like the right way to go.

But not everyone shied away from ARMs. Even though the total number of adjustable rate mortgages was way down in the first quarter of 2011, the total market share of ARMs actually rose to its highest point since 2008. Inside Mortgage Finance, a mortgage trade publication, reports that ARMs actually accounted for 12 percent of all home mortgages in that first quarter of 2011.

Why is that?

Mortgage rates are really low, and the rates for ARMs are REALLY low, and some buyers simply have a hard time resisting that fact. ARMs are especially attractive when mortgage money is expensive, but people really like those rock-bottom rates no matter what the prevailing rates are.

Adjustable rate mortgages are usually written for one, five or seven years, and their rates can go either up or down at the end of the mortgage term. It’s hard to imagine that the rates on new ARMs will be going anywhere but up, current rates being as low as they are.

But for some home buyers, that fact is not all that important. Some people buy homes knowing that they will be turning around and selling their new properties in just a few years – well within in the term of the ARM. In a case like that, there really isn’t much of a down side, or risk of an escalating mortgage rate.

Also, some people don’t like debt and have serious plans to pay off their mortgages in just a few years. If you are one of those people, once again the risk of getting caught with an escalating ARM isn’t very high.

The danger lies in getting an adjustable rate mortgage simply because of the more attractive rate, with no thought given to how you will cover your mortgage payment if the rate goes up in a few years. If you plan to stay in your home for a long time, an ARM may not be a very good strategy for you.

What’s the best mortgage strategy for you? Why don’t you give me a call and we’ll discuss your own special needs and strategies – 727-643-7100.

Tags: Mortgage, Palm Harbor, pinellas county, real estate

Federal government offers mortgage help

Okay, so you’ve been living in your home in Pinellas County and faithfully making your mortgage payments, but your home’s value has been steadily slipping and now you owe more than the place is worth. You keep reading about new government programs that are supposed to help, but you need to find out more.

Fear not – there’s a place you can go to find the help you need.

That place is www.MakingHomeAffordable.gov. It’s a website designed to describe the benefits of a federal program called, well, Making Home Affordable. It offers homeowners a number of opportunities to either refinance their mortgages, or modify the mortgages they already have.

The Making Home Affordable program is financed with $75 billion for loan servicers and borrowers. Its designers say that it should be able to offer mortgage help to four million homeowners who need to modify their loans to make them more affordable, or who need to negotiate short sales of their properties with their mortgage providers.

Officials say that the money will allow Fannie Mae and Freddie Mac to refinance up to five million loans they own (or guarantee). Fannie Mae and Freddie Mac have set up web sites and toll-free hotlines for borrowers who need to determine if their mortgages fall under Fannie or Freddie. Fannie Mae’s is www.fanniemae.com/homeaffordable (phone number (800) 732-6643); Freddie Mac’s is www.freddiemac.com/avoidforeclosure (phone number (800) 373-3343).

Some borrowers might prefer to get information first from their own mortgage servicer. To do that, go to www.HopeNow.com and fill out an application. That web site is operated by an alliance of mortgage servicers and nonprofit counselors. You can talk to them on the phone at (888) 995-4673.

No matter where you live in North Pinellas County – Tarpon Springs, Palm Harbor, Dunedin, Clearwater, Safety Harbor, or anywhere else, for that matter – the information offered applies to you.

Tags: Add new tag, Fannie Mae, Freddie Mac, Mortgage, North Pinellas County