Adjustable Rate Mortgages (ARM) Will Become Mortgage Of Choice If 30-Year Fixed Rate Mortgages Become Less Competitive

22 03 2011


  • 70% of all mortgages issued during the boom were ARMs
  • ARMs totalled just 3% of the market in 2009; currently they make up 5%
  • Freddie Mac predicts 10% by December
  • ARMs are a great bargain right now with the most common ARM loan currently having a rate of 3.5%
  • A $200,000 mortgage would have monthly ARM payment at 3.5% of $898 compared with $1,074 for a 30-year fixed-rate loan at 5%
  • That’s a $10,560 difference after five years, when the ARM would adjust

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Jumbo Mortgages In The Future Will Require Higher Down Payments And Credit Scores With Loan Terms Of Five And Seven Years Becoming The Norm

8 03 2011


  • Jumbo loans represent about 11% of the housing market (more than $45 billion in the 3rd quarter of 2010)
  • This is up from a low of 7% in 2008
  • They average about 12% all mortgage historically
  • Fannie Mae, Freddie Mac and FHA secure more than 50% of Jumbo Mortgages
  • Homebuyers wanting Jumbo Loans need larger down-payments of 20-40%  and higher credit scores, at or near 740
  • Five- to seven-year mortgages, amortized over 30 years, will become the preferred Jumbo program
  • The Fannie, Freddie and FHA limit will fall to $625,000 in October 2011
  • But expect the limit to fall further to $417,000 in next 2 years for most of the country

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