How Adjustable-Rate Mortgages Contribute to Foreclosure Risk
Adjustable-rate mortgages offer flexibility but can lead to payment shocks. Learn how to manage or refinance before it’s too late.
Haidee
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Adjustable-rate mortgages (ARMs) are appealing for their low introductory rates. But when rates rise, payments can suddenly jump — leaving families struggling.
The Danger of Payment Shock
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Initial payments seem affordable but can rise 20–40% after adjustment.
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Many borrowers underestimate long-term costs.
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Rate increases often coincide with economic downturns, creating double pressure.
Solutions for Homeowners
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Refinance to a Fixed Rate: Locking in a predictable payment provides long-term security.
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Request a Loan Modification: Lenders may reduce your interest rate to avoid default.
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Budget for Adjustments: Plan early before the rate resets.
Knowledge and preparation turn risky loans into manageable commitments.
