Some homeowners are going to feel the pain of increased mortgages

June 13 – Reporting has shown that hundreds of thousands of homeowners are about to see an increase in their mortgage payments soon because of adjustable mortgage rates. 

Predictions have suggested it likely won’t be as bad as what we saw in 2007, but it’s going to hurt. 

There were about 1.7 million homes bought in 2019 using Adjustable Rate Mortgages (ARMs). 

Attorney Clint Barkdoll explained, “These ARMs were very popular around that time, because oftentimes, if you were buying a home, you may have been able to get a lower introductory rate on the ARM, knowing that it would reset then in five years. It typically resets at whatever the prevailing fed fund rate is, or it might be that the federal fund rate plus one. Of course, think about what’s changed in five years. So you might have an ARM that was locked in for five years at two and a half or three and a half percent. You’re about to be shocked if that thing is set now to renew and go to prevailing rates, and it’s suddenly going to go up to maybe seven and a half or eight and a half percent. That’s what some of that reporting is alluding to, if someone’s in that situation, and they’ve not budgeted for that, I mean, you’re looking at monthly mortgage payments that could more than double if you’re in one of those ARM products.”