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Borrowers refinance for longer term mortgages By Lore Croghan Daily News Business Writer, January 8, 2007
Tick tock, tick tock. Time is running out on $1 trillion worth of adjustable-rate mortgages nationwide that have interest rates scheduled to re-set this year. Some homeowners are in for serious payment shock unless they refinance, experts said. That's because some homeowners facing the looming deadline took out mortgages that were structured so borrowers paid only interest for the three-, five- or seven-year initial terms. When the rates reset, they'll be on the hook for higher interest - plus principal. Scary repayment scenarios are dulling the popularity of adjustable-rate mortgages. According to a survey by the Mortgage Bankers Association in Washington, just 20.4% of the mortgage applications made during the last week of December were for adjustables - down from a high of 36% in March 2005. But all adjustables are not created equal. In fact, some versions may suit New York-area borrowers better than the classic safe choice, the 30-year fixed mortgage. Homebuyers willing to trade the risk of a modestly higher payment later for big savings now may be right for an adjustable. But be warned - there are still some home loans that hold nasty surprises for borrowers who don't read the fine print. Michael Moskowitz, president of Manhattan-based mortgage lender Equity Now, said the majority of his clients with good credit ratings avoid adjustables altogether and stick with fixed-rate mortgages. "It makes them sleep better at night." With News Wire Services
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