![]() ![]() “They either need to increase their mortgage payment, so they’re paying more of their principal, pay a lump sum, or move to a fixed rate instead of variable rate,” he said. When this happens, the lender sends a notice that their monthly mortgage payments need to change. Once a homeowner’s entire mortgage payment is going toward interest and not the principal, they’ve hit their trigger rate, said mortgage broker Victor Tran of Ratesdotca. It changes automatically in their system.” “The major banks that offer this product aren’t extending the amortizations by choice,” she said. It’s important to note, said Sialtsis, that major banks aren’t handing out 90-year mortgages when people first buy a home the changing amortization period is only happening on existing variable-rate fixed-payment mortgages. Even if they like having their mortgage payment stay the same it’s still being adjusted because now they’re paying much less principal and are more in debt.” “A month ago I came across someone with an 87-year amortization,” said mortgage broker Mary Sialtsis. ![]() Homeowners with a variable-rate fixed-payment are in a riskier position during a high-interest-rate period, experts say, because they are seeing a greater percentage of their monthly payment go toward interest and not principal - and for a longer period of time. There are two types of variable rate mortgages, experts say, one is a variable-rate fixed-payment mortgage, the other an adjustable-rate mortgage - a “floating” payment that rises and falls with changes in the prime rate. “The majority of mortgages at some of the major banks are being extended and homeowners are getting concerned.” “We’ve seen 60 years, 70 years, and we did see someone with 90 years,” said mortgage broker Ron Butler. Now, in the face of crippling interest rates, some existing homeowners are seeing their amortization period go as high as 90-years as their ‘fixed-payment’ variable-rate mortgages adjust automatically to rising interest rates while the monthly payment remains the same. For most homeowners, the standard time to pay off a mortgage is 25 years. ![]()
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