Mortgage rate data from FreeRateSearch.com shows little difference between fixed and adjustable subprime mortgage rates.

Milwaukee, WI (PRWEB) May 31, 2007 — Consumers holding adjustable rate loans may be tempted to refinance with another adjustable rate loan for a smaller payment, but the savings are not worth the risk, warns mortgage rate search engine http://www.freeratesearch.com/ With an estimated $1 trillion dollars in adjustable rate mortgage (ARM) debt resetting in 2007, and about $650 million of that in subprime loans, many homeowners are at risk of refinancing into another risky ARM unless they know all the options available to them.

According to data released today by FreeRateSearch.com, the gap between the best subprime ARM and 30-year fixed rate loan is too small to justify the additional risk of the ARM. FreeRateSearch.com is a free website that allows consumers to search and compare multiple mortgage loan programs anonymously, and get custom rate quotes for any type of credit.

If you are in a dangerous ARM because you didn’t know a decent fixed rate loan was available, don’t let it happen again

FreeRateSearch.com offers the following example* for a subprime loan customer:

Comparison of Best 2 Year ARM vs. Best 30 Year Fixed
Best 2-year ARM: 7.550% rate, $1,756.60 payment
Best 30-year Fixed-Rate Loan: 7.89% rate, $1,815.28 payment

The difference in payment between best 2-year ARM and fixed rate loan is only $58.58 per month, but the risk associated with the adjustable rate loan is significantly higher. [read more]

(PRWEB)  The Mortgage Bankers Associations report that in the first quarter of 2007 the percentage of subprime ARMs that started the foreclosure process climbed to a record high. Analysts estimate that nearly 2 million ARMs will reset to higher rates this year and next. Option ARMs can become so costly they push homeowners into financial crisis. Homeowners can avoid “Payment Shock”, losing their home, and destroying their credit, by refinancing into a less risky mortgage with an online lender.

Option ARMs initially offer the chance to “qualify” for a more expensive home, minimize monthly payments, and achieve greater flexibility of managing monthly cash flow in the beginning of a loan. However, the initial rates are subject to a periodic change or “reset”. Interest rates on loans, and the monthly payment, could increase dramatically. In some case, Option ARM payments can double overnight. Online mortgage lenders and LoanSpace.Org provide the tools, information, and resources to help homeowner’s with their home and credit.

Option ARMs offer minimum payment, interest only, 15-year amortized, and 30-year amortized options. They can be especially attractive to homeowners who have irregular incomes such as educators who do not work during the summer months, salespeople whose commissions fluctuate, and college graduates about to begin lucrative careers.

Conversely, industry experts and Former Federal Reserve Chairman Alan Greenspan warned that many consumers were using the loans to purchase homes they could not afford. Many consumers gambled on the “housing boom” and purchased expensive homes they could “flip” in a few short years for a quick, big profit. Unfortunately, the hot housing boom has cooled considerable in many areas, and several major markets are experiencing a big drop in home values. Buyers who purchased more home than they could afford or made the minimum payment often wind up in serious financial trouble. [read more]