Mortgage Smorgasbord
In the past when you looked at the mortgages available to an individual of median income, his/her options were quite limited. But not these days, everybody who's a lender or a broker has a mortgage plan that can get you into your dream home with "no money down!" and easy "flex payment schedules". Really terrific, right? I'm not so sure.
The article link below details some of the issues with the newest and latest way to get into your dream home, OPTION ARMS. What most people don't tell you is that the teaser rates that is given to you at 1.5% intro is a negative amortization rate, meaning you pay even less than the interest only payment amount montly, whatever portion not paid monthly is added back to your mortgage principle amount.
And another kicker, every year your base mortgage payment is adjusted by some percentage, usually 7.5% . So here's what that means, if you pay $1000 for the first 12 months of this "option arm", the following year your minimum payment is $1075, the following year the payment would be $1156....and so on and so on year after year. So in the 5th year your minimum payment has gone up to $1436...and then the teaser rate is GONE, and you have paid a cent of principle and you owe more than your original prinicple amount!
This is a great loan for people who are looking to make a quick buck (if that is even possible) by buying and selling every few years, but for someone who wants to live and stay in a place for a long time...I don't think so. Mortgage lenders have really become "creative" in this time of high home prices, just to get the buyer in. But an old real estate rule must always be adheared, what goes up...you know the rest.
Mortgage Article
The article link below details some of the issues with the newest and latest way to get into your dream home, OPTION ARMS. What most people don't tell you is that the teaser rates that is given to you at 1.5% intro is a negative amortization rate, meaning you pay even less than the interest only payment amount montly, whatever portion not paid monthly is added back to your mortgage principle amount.
And another kicker, every year your base mortgage payment is adjusted by some percentage, usually 7.5% . So here's what that means, if you pay $1000 for the first 12 months of this "option arm", the following year your minimum payment is $1075, the following year the payment would be $1156....and so on and so on year after year. So in the 5th year your minimum payment has gone up to $1436...and then the teaser rate is GONE, and you have paid a cent of principle and you owe more than your original prinicple amount!
This is a great loan for people who are looking to make a quick buck (if that is even possible) by buying and selling every few years, but for someone who wants to live and stay in a place for a long time...I don't think so. Mortgage lenders have really become "creative" in this time of high home prices, just to get the buyer in. But an old real estate rule must always be adheared, what goes up...you know the rest.
Mortgage Article
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