Friday, June 23, 2006

Option ARM Loans Work In 'Appreciation World'

An Idaho television station reports on option ARM loans. ""Homes across the Treasure Valley continue to gain worth, and more and more people are jumping into the market head first. 'We live in a good market. We live in a market right now where property values are constantly increasing,' said Brett Anderson, owner of Security First Mortgage."

"Also increasing, the rise in popularity of the option adjusted-rate mortgage, also called the pay option ARM. 'I have a couple that just bought a second home, a vacation home they never could have afforded, but on this program,' said loan officer Ricky Catalano."

"But this type of mortgage is still fairly new in Boise, and officials say it would only work in about six or seven places in the entire USA, and we're one of them. 'In this kind of appreciation world it still continues to be a good loan for a lot of people. It isn't a loan for the weak or conservative because it is a very aggressive program,' said Catalano."

"In other areas of the United States, the loan is just starting to run its course and they're seeing a sharp increase in foreclosures. 'If they are presented with the chance to buy a little nicer home people get ahead of themselves as to what they really can afford,' said Tom Lay, of Neighborhood Housing Services."

3 Comments:

At 11:34 AM, Blogger Chris said...

I think ARM's are good if you do them for the right reason. A second home might not be the right reason though. I wrote about ARM's last week...Feel free to check it out..

 
At 9:13 AM, Blogger Chip said...

I think Option ARMs will, for as long into the future as we need to care about, will be used by rich folks as a tool for managing their investments. For average people with any intelligence, I think the product is dead as a doornail, whether for second homes or primary residences. I think it isn't sufficient to look at them as a form of bridge loan, because I believe they carry substantial pre-payment penalties.

 
At 6:28 PM, Blogger mort_fin said...

Just for snicks, I emailed the reporter and asked who the "unnamed, no institution identified" officials are who endorsed these products. She answered. It was the two "mortgage professionals" quoted in the story. Thank god she turned to an unbiased source for that recommendation.

 

Post a Comment

<< Home