Exotic Mortgages Raise the Stakes for Borrowers

Willie Lee Howard of Washington thought that a fixed-rate mortgage would help in stabilizing his finances so that he could retire comfortably. Unfortunately, like many others before, Howard ended up with a mortgage that went beyond his comprehension. After receiving his mortgage documents and later consulting AARP, he found that he was stuck in an interest only loan.

The interest only loan is a mortgage loan that has struck raw nerves through America since this type of loan has a rising balance, not a falling balance like other traditional mortgages. The market of home lending has changed dramatically from what it used to be. Those Americans that are used to certain types of home loans may find themselves like Mr. Howard in a less desirable mortgage that will only lead to the need to refinance at some point.

These types of loans were originally created for those that had potential to make more money at their employers, but lately have been putting more people at risk. These nontraditional loans are cropping up every where and luring people into false pretenses of a great deal when in fact the deal is one that is very undesirable. Another large problem with these loans is that once a person can't pay it, the falling house prices means that selling the home may not even clear up the money due on the loan.

Contributing National Payday Staff Writer

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