by Calculated Risk on 11/18/2005 05:47:00 PM

CNN reports: Homeowners with ARMs face big bill jump

The Mortgage Bankers Association estimates that some $330 billion worth of ARMs will adjust in 2006 and $1 trillion worth will reset by the end of 2007.

Since the average ARM loan is about $300,000, according to Freddie Mac, a trillion dollars probably represents more than 3 million homeowners who will face bigger bills in the next two years.

If you took out an 3/1 ARM for $300,000 back in late 2002, your initial interest rate was probably around 5 percent and your monthly payment has been about $1,610.
...
Your new payment: $1,995 a month -- a difference of $385, or more than $4,600 a year.

For more details on adjusting ARMs, see this NY Times article from June: The Trillion-Dollar Bet