So, your Adjustable Rate Mortgage is due and you’re not sure what to do . . . . . This question is facing a larger portion of the home owning public than in many prior years, but more so than usual among the greater swath of our population, who, inspired by Alan Greenspan, took an Adjustable Rate for smaller loans known as Conforming Loans. If you take the time to do a little research on the Federal Housing Finance Board’s website for mortgage statistics and look up the Percentage of ARM loans (this is an Excel Spreadsheet), it might be surprising to find that the Percentage of Adjustable Rate Mortgages issued throughout the country is substancially higher amongst people who secure Jumbo, or Non-Conforming loans which are as one may imagine, larger than Non-Jumbo, or Conforming loans.
The trends that the FHFB shows to us are that persons with Conforming mortgage loan amounts (currently, under $417,000) obtain ARM loans at the same ratio as those high stakes gamblers who are spending larger sums of money on their homes with Jumbo loans. As of the latest published year, 2004, more than 30% of home loans originated had an Adjustable Rate feature for Conforming loans amounts, which all adds up to more questions about refinancing and planning for Middle Income families in this year, and the next 5 years ahead.
In the next article on Friday, we’ll begin to delve into the world of Payment Shock and its effects on holders of Adjustable Rate Home loans.