Subprime Adjustable Rate Mortgages (ARM) Wreak Havoc

I hear this every day . . .

"My adjustable rate mortgage was fine when it started but when it came time for the rate to adjust, the new payment was more than I bargained for."

There are caps on the adjustments, but they're not very consumer-friendly. Usually the rate can increase by 3 percent on the first adjustment and then 1 percent at every subsequent adjustment. The lifetime cap is usually 6 to 7 percent above the start rate.

End result: A much higher interest rate and payment than the homeowner ever expected.

Here’s the danger – what if you're unable to refinance when your rate starts going up? If you have credit issues that prevent you from getting another loan, you can wind up in a world of hurt. What's going to happen when the payment goes up dramatically and then continues to increase every six months? That spells bad news for a lot of homeowners.

Not only does your home provide shelter, it's also the foundation for building financial security and wealth. Unfortunately, too many hard-working Americans have been put in a situation where their home (and future financial security) is at risk. Are you one of them?