NOTE: This article is part of the forthcoming book, the Gotcha Guide™ to Buying or Investing in Real Estate. Email us to join the mailing list for the release date. By DeeinAustin™
Remember Adjustable Rate Mortgages (ARMs)? Here's a tip. They're mortgage loans that gained popularity in 2003-2005. Now pick the best explanation of their fate from 2006-2007...
A) They're little demons that caused our foreclosure rate to increase to the highest in American history, prompting over 200 lenders close their doors.
B) Along with sub-prime loans, they were the downfall of the U.S. real estate and mortgage market, sending investors (i.e. speculators) and the secondary lending market running for the hills.
C) They aren't so bad if used wisely and may be converted to fixed-rate loans with minimal paperwork and about a $250-$500 fee.
D) All of the above.
My ANSWER: Is D... All of the above, with caveats. I do agree that ARMs are one of many reasons why the lending market is now in recovery. The truth is that lending guidelines became lax and borrowers weren't being responsible.
TOP 3 REASONS WHY ADJUSTABLE RATE MORTGAGES AREN'T THE BOOGEYMAN
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