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Adjustable Home Loans - How People in Adjustable Rate Loans Got Stuck and What They Can Do

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By : Corey Bruhn    99 or more times read
During the last boom in real estate in America adjustable home loans were used by mortgage lenders to give a lot of people the chance to buy a home or refinance their mortgage. In most cases these loans were given by sub prime lenders and had high loan rates. In other cases people were drawn to the ARM mortgage for its lower interest rate when compared to the fixed rate loan, meaning they could buy more house with the lower rates the ARM offered them.

When Did The Trouble Start With ARM Loans

All was good until the bottom fell out of both the US economy and the housing market. When the bottom fell out it caused two things to happen. First the values on people homes plummeted and secondly the creative financing and sub prime loans most people used were now gone. This left many people with no way to refinance their mortgage, they were pretty much stuck in their ARM loans with no way out.

Being stuck in an ARM loan was a major concern for these home owners because their rates and payments kept increasing, some borrowers had payments that shot up over $200 on the first adjustment! Many people were unable to pay these increased payments and fell into foreclosure. The drop in real estate is the major cause for the record foreclosures going on in America right now!

What Can I Do If I Am Stuck IN an ARM Home Mortgage I Cannot Refinance

You can either use one of the government programs that allow people with Fannie Mae or Freddie Mac loans to refinance up to 105% of the value of the homes or the "Home Affordable Plan" that gives lenders cash incentives to modify borrowers loans. However you can also call and talk to your lender and ask them to modify your loan to stabilize the interest rate and reduce your payments. As long as you have been a good customer they should do it for you!
Where Can I Learn More About Loan Modifications

To learn more about the options you have when struggling with your Adjustable Rate Mortgage and how to get back on track and keep your home, log on to today.

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