Countrywide Mortgage Warns Interest Only Mortgages Reset Dangerous and Scary
The interest only mortgage and variable pay mortgage have been two programs that have been popular in parts of the country. It allowed families to buy homes that they otherwise would not have been able to purchase.
The problem is that these mortgages have very expensive resets when they come due, sometimes even doubling the payments of the mortgage. This has both the homeowners and the mortgage companies getting very nervous. Countrywide Mortgage has sent out a warning letter to holders of interest only and variable payment mortgagees explaining the risks that these families are facing.
For a borrower paying the minimum payment on a 402,000 dollar mortgage, they are presently paying $1,348 per month. When this loan resets, the payments will go up to $2,887.50. The letter explains the alternatives to the borrowers.
Countrywide’s helpful advice to its customers who want to prepare for their resets:
• Switch their payment option out of the minimum if they can and move to either a 15-year or 30-year standard amortization plan.
• Switch to an interest-only option if full payments are not feasible at the moment. At least interest-only payments will not result in still-higher principal debt balances to pay off later.
• Explore alternative refinancing options sooner, rather than later. via the baltimoresun.com.
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