January 12, 2006

Boston: ARMs come home to roost


Once you get behind that 8-ball, it's tough to get out

I've heard stories of people who refi'd just to take $ out to help with their monthly payments which they couldn't afford

Here's the sad update from Boston - thanks to a couple of Boston HP readers for sending the article:

Squeezed by rising interest rates, homeowners who stretched their finances to buy properties while the market was hot are scrambling to pay higher monthly payments on adjustable-rate mortgages that were the least expensive option at the time they purchased their homes.

''A lot of people live paycheck to paycheck, and they're losing a couple hundred bucks a month" due to higher rates, said Edmund Poli of Poli Mortgage Group in Norwood. More homeowners are coming to his firm for help, but ''sometimes there's not much they can do because they have 100 percent financing."

''People have put problems off by multiple financings and increasing equity," he said. As a last resort in a rising market, he said, people could sell the house and pay off the loans. But if prices decline, selling a house will not generate enough cash to pay off a loan.

''I have a sense it could get ugly soon," he said.

3 comments:

Anonymous said...

I don't know how people get approved for loans. Banks are running a big scam and that's the reason why the bubble will pop.

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