Some banks mostly offer fixed-payment variable mortgages which allows homeowners to keep monthly payments the same, but leaves them vulnerable to paying little off the principal, experts say.
This is a variable mortgage issue. No one is lending new mortgages at these amortizations. Fixed payment variable mortgages vary their amortization period as interest changes. The monthly payment stays fixed, unless it hits a threshold when the bank increases the monthly payment to bring the amortization period closer to reality.
AFAIU banks are using this to avoid bankrupting owners who can’t afford their mortgage. Isn’t something like 25% of mortgage debt part of 35 year+ terms now?
Those are a lot of homes that should be foreclosed on and returned to the market.
It depends. If your payment is less than rent would be you’re still coming out ahead. And the alternative could be a payment you can’t afford. At least this way you can choose to sell or ride it out and wait for rates to come down instead of getting foreclosed on.
This is a variable mortgage issue. No one is lending new mortgages at these amortizations. Fixed payment variable mortgages vary their amortization period as interest changes. The monthly payment stays fixed, unless it hits a threshold when the bank increases the monthly payment to bring the amortization period closer to reality.
AFAIU banks are using this to avoid bankrupting owners who can’t afford their mortgage. Isn’t something like 25% of mortgage debt part of 35 year+ terms now?
Those are a lot of homes that should be foreclosed on and returned to the market.
I didn’t realize this was a thing. I like this way better than letting the monthly payment fluctuate.
Except at a certain rate your entire payment is going towards interest and your principle doesn’t go down at all so its basically throwing money away.
It depends. If your payment is less than rent would be you’re still coming out ahead. And the alternative could be a payment you can’t afford. At least this way you can choose to sell or ride it out and wait for rates to come down instead of getting foreclosed on.
More accurately:
Mortgage payment + maintenance + tax < rent