We were talking to our friend Jennifer the other night. They are now trying to sell or rent out a lovely 2800 sq ft house about a mile from their current residence. To a certain extent, she's not thrilled with the idea of selling it. They originally had the house built to be their primary residence, but then came across their current house with a ton of land and really decent price. So they rented their original house out.
Fast forward two years. Their ARM was getting ready to adjust, as many are right now. However to refinance now would mean to refinance at an Investor Home interest rate, which is higher than a primary residence. Their renters moved out, and they decided to sell instead. They priced it under market value and have not really gotten much traffic. So now they are looking to rent it and which ever happens first, they'll go that route.
She was showing the house to some prospective renters the other night. They are people who are in the process of letting their home go into foreclosure. Their reason is that they "got caught up in the ARM Scam."
WHAT? ARM Scam? Adjustable Rate Mortgages are great products if used right. They can help people get into houses quicker, rebuild their credit and then refinance. Lenders are required to provide you a truth in lending statement that highlights what your payment would be after the rate adjusts. You are required to initial these documents when you receive a Good Faith Estimate. You are shown these documents when you go to the Title Company when you sign all of your documents to purchase your house.
I hate the fact that people are not taking responsibility for their own actions and taking steps to remedy the situation before it gets to foreclosure. Call your lender and see what terms can be worked out. If your lender can't help you, call around and see what other options are available. Are there bad lenders out there? Yep. You need to be careful. But also make sure you are actually reading the documents you are signing and ask questions if you don't understand.
OK. Rant over.
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1 comment:
Bravo!
People don't do their homework, they just start signing because they see the way to get what they want - and then act surprised?
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