Homeowners with ARMs Face Incresing Payments
ARMs (Adjustable Rate Mortgages) have become a very popular way to finance houses in the past several years. Homeowners with who enjoyed low interest rates when they bought their homes will be seeing large increases in their payments when the loans adjust. CNNMoney has an article about this.
This could further soften the real estate market. As homeowners face bigger bills, they may not be able to afford their houses anymore, leading to more houses on the market, and dropping prices. I would expect to see the number of foreclosures go up in the next few years as well.
This however, can be a golden opportunity to smart real estate investors who are able to take advantage of this situation.
ARMs have always made me nervous, but do you
really think that they specifically will cause
the market to go soft? It makes a lot of sense the way you put it.
I don’t think that ARM rates increasing will alone make the market soft, its just one of many factors that will contribute.