Option Mortgages Coming Due

In the craze to get a house and mortgage during the 2003 housing boom, many homeowners could afford their dream home only by way of an adjustable rate mortgage. While the introductory rate and payment may have fit their budget, that fixed period is soon expiring, causing payments and blood pressure to go way up. An adjustable rate mortgage usually has a fixed period of interest that is three or five years. After that point, the interest rate, and in turn the monthly payments go up. Sometimes this can increase a monthly payment by double.

As rates stabalize, it is recommended that those nearing the end of a fixed period of their ARM refinance their mortgage. Homeowners are increasingly taking advantage of a relief in fixed rate mortgages in order to get out of adjustable mortgages, a development that mortgage lenders are looking at with approval. Large amounts of ARMs make for a higher rate of foreclosures; some lenders even offer homeowners small discounts in their mortgage if they are refinancing out of an adjustable loan.