Whinery from people too smart to be bothered with learning the definition of "adjustable":
For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.
When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.
"We were having a hard time meeting bills at the time we refinanced. It seems once you get behind, you do desperate things to catch up, and you never do," says Lorraine, trying to hold back tears. "At the time of the loan, they tell you, 'Well, it may go up, but it's probably going to go down.' You want it to be so, so you believe it."
While recognizing the potential risks involved with adjustable mortgages, please pardon my insensitivity to the plight of Robert and Lorraine Brown.
First, they refinanced to an ARM just two years ago, when the writing was clearly on the wall regarding rising interest rates.
Second, they've lived in their house for 45 years. Maybe I missed something in the Fannie Mae brochure about those 45-year conventional mortgages, but I'm guessing the Brown family's financial problems were going to be pretty substantial regardless of how they chose to refinance their home. What was wrong with a fixed mortgage? Or, at their ages, why not go for a reverse mortgage?
Why do I think these are the same people who bitch about Nigerian spam scams, property on Florida swampland, and their Elvis collector's plates decreasing in value?
Continue reading "Homeowners Struggle With Adjustable Rate Mortgages."
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