is throught he roof! It is a little scary to see how bad of shape many homeowners are in here. Today there was an article in the Rocky Mountain News aout how ARMs (Adjustable Rate Mortgage) are the big player in these foreclosures.
Now, before you all think this is a post about how to invest wisely in your home, it is more of a post about how full of crap the people quoted in teh article are.
Last year we went house shopping for our first home. Rates were on the increase and with each increase we had to decrease the dollar value we were going to be able to spend on a home. When it came time to picking the company we wanted to finance with and the best rate we were bombarded with requests to do ARMs. Everyone advised us (from the financing companies) to do ARMs since most people don’t hold onto their homes for very long.
We were smart enough to go with a fixed rate mortgage that even a year later has a desireable interest rate for anyone financing now. What’s funny is these mortgage companies and real estate offices that are quoted int eh article are most likely the same people that pushed homeowners into getting ARMs.
While no one, including financing companies, wants to deal withaÂ foreclosure they new, and most educated investores knew, that interest rates were going to keep climbing. Even three years ago these same naysayers were touting ARMs as the best way to go. Thinking the low interest rate ride was going to keep going.
Have we learned nothing from the past? Do people not understand cycles and that steady growth is preferable over rapid growth? Or are people jus setting themselves up for failure about every 5 or 6 years?
I really do feel for everyone that is feeling the pinch that got ARMs a few years ago and those that got them in the past year are probably even more nervous since rates have continued to climb and they could be in even worse shape a few years from now.
In the end, this post is just pointing out how businesses will jump the bandwagon to look good. Everyone that touted ARMs as the greatest thing on earth as recent as last year are now saying “Stay away!”
Oh, and Happy Mother’s Day to all you Mom’s out there!