Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

August 15, 2006

“Payment Shock”

by @ 8:21 am. Filed under Real Estate

The lead story in the Real Estate section of Sunday’s Globe was “Adjusting expectations: Rising mortgage interest rates are giving homeowners with ARMs a bad case of ‘payment shock,’ but the certainty of fixed rates comes at a cost too, leaving people with a tough call on what to do.” The article’s focus was on the millions of homeowners who either purchased or refinanced with adjustable rate loans during the past few years. Now that many of those loans are reaching their three to five year “adjustment” period, many are or will see their monthly payments rise considerably. The dilemma they face (besides paying more each month) is whether to convert to the certainty of a fixed rate loan (which still carries a higher interest rate than the current adjusted rates of existing ARMs) or to ride it out with the existing adjustable rate mortgages. As the article says, even Wall Street economists can’t predict where interest rates are heading, so the average homeowner is not really in a position to do much more than guess. The article also emphasizes that as housing prices stagnate or slide, it will become more difficult if not impossible for many who purchased when prices were at their peak to refinance or sell since they may owe more than the property is now worth.

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