Quick question on ARMs.........

[Nevilledog]

I just thought of something in regards to ARMs..... what was the standard (if any) amount of time that a person with an ARM would have a low percentage rate on their mortgage BEFORE their reset would happen? Seems to me if it was shorter than 8 years that we'd have a pretty damn good argument that this mortgage crisis lays squarely at the feet of the Bush administration and it's policies.



edit for too early typo

[Fresh_Start]

1. usually 1 year or 2 years

there were also 10 year balloons but those were relatively uncommon

[Nevilledog]

5. That's a shorter time than I imagined.

Is it really possible that most people thought it would be that easy to refinance to a fixed mortgage that quickly after getting an ARM? Or did people not understand the huge increase in mortgage payments? I admit that it's hard for me to understand how people got caught in these horrible mortgages without knowing it was gonna backfire. I also wonder how many people had fixed rate mortgages who refinanced into an ARM. Seems to me there had to be a lot of sweet talking brokers convincing people it would be easy to switch over to a fixed rate and that all they needed to do was get a foot in the door by getting any type of mortgage available just to get a house.

[DadOf2LittleAngels]

10. Ive seen up to 5 years

usually 1,2,5 years depending on the ARM..

People did it because they planned to refinance after establishing their credit..

[PA Democrat]

2. Traditional ARMs I believe reset after the first year.

There are also "hybrid" ARMs with longer time frames for "teaser" interest rates, but I believe those are usually reset after about 3 years.

[peace13]

3. Th use of interest only mortgages added to the problem.

We have developments here that used this type of ploy. Five years interest only, and now the people are losing their homes because they can't pay on the principle and they have no equity. Go figure. It is very sad.

[Nevilledog]

6. Doh.... forgot about those types of mortgages too.

However, I guess I kinda lump them all in my mind as a type of clusterfuck financial deal.

[diello]

4. anywhere from1,3 or 5 years (nm)

m

[sybylla]

8. This was true in my case - initial rate was set accordingly

The longer the initial fix, the higher the rate. In fact, I was pissed at my banker because I told him I wanted a 5 year fixed when we refinanced 4 years ago. When we went in to sign the paperwork and get our check, it was all set up for a 3 year fixed. It didn't matter to me that the initial rate was a quarter percent higher. I knew if there was one rate increase in that 5 year period, I would make out.

[Xenotime]

11. We have a 5 yr

[ileus]

7. ARM's have been around a lot longer than Bush.

[aikoaiko]

9. When I was mortgage shopping I had offers of 1 - 7 years.

[DadOf2LittleAngels]

12. No *one* person is at fault for the mortgage mess

1) The government pushed lenders to make home ownership easier (the road to hell and all)
2) Lenders complied but would not treat someone with a lower income and poor credit as well as someone with more money and better credit (expansion of arms)
3) Buyers bought *way outside of their price range* or bought *just within* using an arm...

When I bought I could have taken an arm and saved about 100$ a month, but I bit the bullet and get a 5% fixed knowing that interest rates were going to change... 1 was done foolishly without thinking through the repercussions and 2/3 were done out of greed..