Arizona Mortgage Guru » Risk of Foreclosure by Mortgage Type

The Arizona Repulic reported yesterday that not only is the inventory of homes for sale at an all time high but that homes marked for short sale to avoid foreclosure is also up. Bankrate has some pretty interesting numbers on foreclosure risk based on the type of mortgage.

• Prime-rate fixed-rate: 1 in 588
• Prime-rate ARM: 1 in 189
• FHA fixed-rate: 1 in 147
• FHA ARM: 1 in 101
• VA: 1 in 244
• Subprime fixed-rate loan: 1 in 77
• Subprime ARM: 1 in 31

I find it revealing that ARM’s have a higher rate of foreclosure. Most likely it is a result of a pre-payment penalty and/or poor credit management on the part of the borrower. Lack of strong loan analysis by the loan officer probably has something to do with it as well.

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Categories: Interest Rate, Mortgages

3 Responses to “Risk of Foreclosure by Mortgage Type”

Arizona Mortgage Guru » Blog Archive » Forget Your House, How Much is Your Credit Score Worth? sent a pingback on September 11, 2007, 3:45, pm

[...] I suggest you download the flier, call Aimeeand make a plan to own your home. This is also an attractive solution if you’re in a subprime mortgage and want to make sure your credit is in good shape before your ARM adjusts. [...]

Mark Jones wrote a comment on March 5, 2008, 9:39, pm

Most of the foreclosures are due to adjustable rate mortgages(ARMs). Many homeowners who got adjustable rate mortgages (ARMs) on their properties when rates were at an all-time low. Now those adjustable rates have increased and many homeowners find themselves making payments on homes that have no equity or even have negative equity. There is still hope for homeowners in foreclosure. There is a good site where homeowners in foreclosure can get help. Admin Note:

Peter wrote a comment on March 20, 2008, 4:54, am

Adjustable rates have increased and many homeowners find themselves diffcult to make payments on homes that have no equity or even have negative equity. There is still hope for owners in foreclosure, so that they can get some amount above equity.