Sunday, January 23, 2011

ARM Resets Benefit from Low Interest Rates

Big Wave of Mortgage Resets May Not Be As Bad As Feared by reports that holders of adjustable rate mortgage (ARM) will benefit from the current low interest rate environment. Since mortgage interest rates are pegged to indices such as the interest rate of U.S. Treasuries or the London Interbank Offer Rate (LIBOR), many ARMs will be lowering interest rates versus 2006 to 2008, when the initial rate was set.

This is good news for people with ARMs who are still making their mortgage payments. Their monthly payment may be reduced depending on when they initially borrowed the funds. Thus, the number of mortgage defaults due to ARM resets are expected to be lower than originally predicted.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or mortgage advice. Please consult a professional advisor.

Copyright © 2011 Achievement Catalyst, LLC


chandra said...

Short and simple but perfect note on ARM. I hope every citizen make use of this for there mortgage payments. I have also shared this with facebook!

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Jazzie Casas said...

Last year was kinda a bizarre year for the mortgage market. In the first half of the year, you had a decent number of home sales keeping mortgages for purchases stable, thanks to the home buyer credit. In the second half of the year, that changed as demand crumbled when the credit was withdrawn. At the same time, you had very low mortgage interest rates throughout much of the year cause a mini-refinancing boom. 2011 will look very different, as the housing demand continues to struggle and mortgage interest rates have begun rising.