I ran accross this article over at Tampa Bay Online about how homeowners are refinancing and going with fixed-rate mortgages. I thought this part of the article was interesting (emphasis mine):
For some, ARMs continue to make sense, Powers said. “Some borrowers want the ability to manage that cash flow the way that an ARM can allow,” Powers said.
“They want to be able to control that and eliminate as much volatility as possible,” he said. “When they get this payment-change notice that says their payment’s going to go up hundreds of dollars a month, that’s usually the wake-up call to say, ‘Look, talk to me about options.’ That’s why we’re seeing our business experience a benefit from borrowers who are getting into a payment that they know is secure and provides some known quantity down the road.”
That’s nice that the mortgage broker get paid TWICE for doing something they should have done right in the first place. Think about it. Every time the borrower refinances, the mortgage broker makes a nice fee.
I have to wonder how good a job these mortgage brokers did explaining the options to borrowers the first time around.