Lenders are once again pushing short-term adjustable rate mortgages, called ARMs, and homebuyers seem to be snapping them up. Does this mean we’re headed for another round of easy and dangerous lending practices?
According to CNBC, more people applied for ARMs last month than they have since October 2014. Mike Fratantoni, the Mortgage Brokers Association’s chief economist, explained the trend this way: “Homebuyers in a strong housing market are looking for ways to extend their purchasing power, and ARMs are one way to do that.”
That basically means that with home prices and interest rates rising, borrowers are having a harder time qualifying for homes. Short term, adjustable loans loans tend to offer lower interest rates than 30 years fixed mortgages, allowing homebuyers to qualify for more.
For the full scoop, go to: NewsForInvestors.com