A.R.M.Ed and Dangerous; Adjustable Rate Mortgage Mess Snares Homeowners; Payments Skyrocket As Values Decrease

Summary

---

WHEN Jacalyn Wright bought a singlefamily house in Meriden in March 2006, concerns about her mortgage payments put a slight damper on the excitement of owning her first home.

Originally hoping to spend no more than $1,200 or $1,300 a month on mortgage payments, she ended up taking out two adjustable rate mortgages, or ARMs -- one covering 80 percent of her $199,000 loan and another covering the remaining 20 percent -- resulting in combined monthly payments of about $1,600. She financed the entire mortgage, with no down payment. Though worried about the financial impact, she was driven by the American dream of owning a home, she said.

See the full content of this document

Extract

---

A.R.M.Ed and Dangerous; Adjustable Rate Mortgage Mess Snares Homeowners; Payments Skyrocket As Values Decrease

Now, 16 months later, her mortgage payment has ballooned to more than $2,000 a month, forcing her to work at least 80 hours a week, split between two jobs.

And the threat of foreclosure looms. "It does worry me," Wright said.

She is not alone. In recent years, as home prices soared, ARMs became increasingly popular. The variable-rate mortgages offer home buyers a fixed low interest rate on the loan for...

See the full content of this document

---