These institutions “qualified” people for a mortgage who didn’t actually qualify and who could not meet their monthly mortgage obligations. These predatory practices were fueled by GREED! An unsustainable “bubble” was created and when the bubble burst, a lot of ordinary Americans got hurt.
The very foundation of the “American Dream” is home ownership so you really can’t fault those who relied on the financial advice of greedy lenders and purchased homes they couldn’t afford.
People want to own their homes. And people are still buying homes! And people are still signing their names on the dotted line and agreeing to mortgage terms that aren’t in their best interests.
All mortgages aren’t the same. You need to know the real facts about the mortgage offered before you agree to it.
The Adjustable Rate Mortgage: The interest rate on an adjustable rate mortgage is tied to fluctuations in the financial market.
Interest rates fluctuate….dramatically! So if you get your mortgage when the interest rate is at 2%, when the interest rate goes to 8% your monthly payment will skyrocket. On the other hand, if you get your mortgage when the interest rate is 8% and it drops to 10%, your monthly payment will drop like a stone.
The Fixed Rate Mortgage: The interest rate on a “Fixed Rate Mortgage” will not change. The last payment you make on a 30 Year Fixed Rate Mortgage will be exactly the same as the first payment.
A “fixed rate” can have both advantages and disadvantages because it isn’t tied to the fluctuations in financial markets.
There are other types of mortgages available; the balloon mortgage and the jumbo mortgage are two types.
Before you sign any mortgage agreement, you need to know and understand the terms you are agreeing to… otherwise you aren’t likely to survive out there in the mortgage jungle!
Get your FREE EBOOK “How You Can Set Up a Family Budget” by Grace Bridges. To learn more about debt, credit repair and personal finance visit http://www.debt.uselfhelp.com
Grace Bridges has been involved with the credit industry for more than 30 years. She and her husband have a small cattle ranch in East Texas.
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