Hundreds of thousands of U.S. homeowners who took out adjustable mortgages in 2019 could soon see their monthly payments skyrocket as their rates reset.
A small group of Americans who took out cheaper but riskier mortgages several years ago are about to see their monthly payments skyrocket. Since 2019, more than 1.7 million homes have been bought using adjustable rate mortgages , which initially offer a lower, more affordable interest rate than their fixed-rate counterparts. But eventually, ARMs reset to an unknown future rate, meaning there is a high degree of uncertainty for individuals who take on these types of loans.
"In taking or keeping that adjustable rate mortgage, they bypassed the lowest fixed mortgage rates in history," McBride said. Now, however, ARM rates are hovering around 6.5%, according to a Bankrate database, nearly double the rate five years ago. Under that new rate, the monthly payment would surge to about $1,582, according to FOX Business calculations.
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