Adjustables are used in less than 9 percent of state's financed homes
New Mexico is near the top of a list, and it's not a bad one. According to a Federal Housing Finance Board study, fixed-rate mortgages are preferred by more people nationwide than adjustable mortgages. In the study, New Mexico was ranked fifth in the nation in the percentage of home buyers who have received fixed-rate mortgages. More than 91 percent of the mortgages in New Mexico are fixed.
Stuart Gabriel, director of the University of Southern California Lusk Center for Real Estatecolor>, explains in a report for the Homeownership Alliance that fixed-rate mortgages were unheard of before the Federal Housing Administration introduced them during the Great Depression as a way to encourage people to buy homes. Coupled with low interest rates on mortgages, fixed-rate mortgages have spurred a boom in home sales. With an most adjustable mortgages, borrowers may have lower monthly payments but can expect a balloon payment at some point.
Fixed-rate mortgages allow borrowers to finance a home for up to 30 years with the same monthly payment over that time.
The Homeownership Alliance said that fixed-rate mortgages have allowed people who normally wouldn't qualify to finance a home to do so.