Although riskier, this type of mortgages offers buyers chance to make lower payments now, refinance later
Economists have long said that renting and investing in the stock market is a better investment than owning a house, and in 2022 that could be especially true. WSJ’s Dion Rabouin explains. Photo illustration: Elizabeth Smelovthis week, pushing already pricey homes further out of reach for many borrowers.
Discouraged buyers might choose to hold off, betting that prices and rates will drop in the years ahead as the market cools and inflation slows, as some economists predict. For those who want to move sooner, an adjustable-rate mortgage is one way to do so, buying with lower payments now and refinance when rates are better.
I must respectfully disagree. ARMs are absolutely a poor strategy. Rates are most likely to increase before ever heading downward. Fixed rate mortgages such as those through FHA are eligible for refinance if rates drop 1 point or lower and at no cost whatsoever to the homeowner.
2008 all over again….
Who are these 'homebuyers' you speak of? Are they like leprechauns and centaurs?
ARMs were one of the factors that bit homeowners in the 2008 crash when interest rates rose and increased monthly payments. ARMs don't fix housing affordability.
Fun fact: over 90% of mortgages here in Finland are adjustable rate.
Stop pumping ARMs when the interest rate is spiking, goobers
Here comes the realestateCRASH
MahsaAmini
Stop! This is how we blew up the economy last time. When those ARMs reset interest rates will almost certainly be higher and housing values lower. The last thing we need is a time bomb set to go off in five years.
tic tac mfkeer
Make sure the rate the is fixed for the time period you intend to live in the property. Most people move very 5-10 years (more when younger, less when older). Also ask if your lender offers Buydowns. Those are fixed rate loans where a third party pays to lower the initial rate.
Get a mortgage that adjusts while interest rates are rising. Brilliant!
Saved for my collection of garbage opinions. Thanks for the top slot. Take this down, this is gross. Be better
Risky mortgage in an artificially inflated housing market. 2005 called, they want their plot back.
Usury sucks 😕
If rates go down you can refinance. If rates (as I think everyone expects) go up, you’d be in trouble.
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