Adjustable Rate Mortgages Expected to Fuel Increased Bankruptcy Filings
By Patrick Conway, Attorney at Law
Adjustable Rate Mortgages (ARMs) are expected to lead to an increase in bankruptcy filings over the next few years. Many home buyers in recent years financed their home purchases with mortgage loans that include adjustable interest rates. Often, ARMs were offered to purchasers with bad credit who could not qualify for traditional mortgages with a fixed interest rate.
Interest rate adjustments of 6% over the life of the loan are common with ARMs. This type of increase could add hundreds of dollars to a monthly mortgage payment. An increase of $200 per month would likely prove disastrous to many homeowners.
Until recently, borrowers with ARMs counted on rising real estate values to allow them to refinance their mortgages before the higher payments took effect. Rising home values meant increased equity that allowed people to refinance the mortgage. Now, however, with declining real estate values common, borrowers often have little or no equity in their home. Without sufficient equity, refinancing the mortgage becomes much more difficult.
Many people are unable to afford the higher mortgage payments. The result is an increase in foreclosures that is expected to continue for the next few years.
If you or anyone you know has questions about foreclosures or bankruptcy please call our office to speak with a bankruptcy professional.
Patrick J. Conway, Attorney at Law
Mark E. Godbey & Associates
708 Walnut Street, Suite 600
Cincinnati, Ohio 45202
(513) 241 - 6650 phone
(513) 241 - 6649 fax
Adjustable Rate Mortgages (ARMs) are expected to lead to an increase in bankruptcy filings over the next few years. Many home buyers in recent years financed their home purchases with mortgage loans that include adjustable interest rates. Often, ARMs were offered to purchasers with bad credit who could not qualify for traditional mortgages with a fixed interest rate.
Interest rate adjustments of 6% over the life of the loan are common with ARMs. This type of increase could add hundreds of dollars to a monthly mortgage payment. An increase of $200 per month would likely prove disastrous to many homeowners.
Until recently, borrowers with ARMs counted on rising real estate values to allow them to refinance their mortgages before the higher payments took effect. Rising home values meant increased equity that allowed people to refinance the mortgage. Now, however, with declining real estate values common, borrowers often have little or no equity in their home. Without sufficient equity, refinancing the mortgage becomes much more difficult.
Many people are unable to afford the higher mortgage payments. The result is an increase in foreclosures that is expected to continue for the next few years.
If you or anyone you know has questions about foreclosures or bankruptcy please call our office to speak with a bankruptcy professional.
Patrick J. Conway, Attorney at Law
Mark E. Godbey & Associates
708 Walnut Street, Suite 600
Cincinnati, Ohio 45202
(513) 241 - 6650 phone
(513) 241 - 6649 fax
posted by Mark Godbey & Associates at 12:53 PM
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