With the housing market still recovering from a stupendous slump, refinancing seems to be on the rise. It seems that rates and timing is making it extremely advantageous to refinance your loan into a 30 year fixed-rate mortgage from an adjustable rate loan.

According to CNN Money,

"The average rate on the 30-year loan has fallen more than
three-quarters of a percentage point since July, and it is near its
lowest level since October 2005."

It seems like it would be a done deal for those trapped in the unforeseen future of an adjustable rate mortgage.  But the data from Loan Performance notes that not all borrowers are rushing in to the security of fixed loans. Homeowners are still choosing the financially riskier interest-only and payment option ARMs.

The reason? The usual. Homeowners want to keep their payments as low as possible "right now" in order to free up spending cash "for today". Some are planning on flipping their homes in a few years with the hopes of an improved housing market and want to keep costs as low as they can in the meantime.

Suffice it to say….

"Interest-only and payment-option loans typically offer lower monthly
payments than fixed-rate or traditional adjustable-rate mortgages – at
least for a short period. But they also carry with them the risk of
greater payment shock when the loan readjusts upward and greater risk
of owing more on your home than you could sell it for, especially if
home prices fall."

And I think we all know what that’s like.