ARMs versus GPMs
ARMs versus GPMs
Some borrowers confuse ARMs with graduated payment mortgages (GPMs) because GPM borrowers experience an increase in the payments over time. With a GPM, however, you pay less during the first year so you can qualify for a larger loan; then, during the next four years, your monthly payments increase gradually. Thereafter, your payments remain the same for the next 25 years. Your lower monthly payments during the early years of the mortgage offset the higher payments you’ll make during the later years. For an example, see Table 2.
| Table 2. Monthly Payments (8%, 30-Year, $100,000 Loan) 30-Year Fixed-Rate vs. Read more...
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What Is Predatory Lending
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What Is Predatory Lending?When journalists write about predatory lending, they tend to focus on the sub-prime mortgage market (say, unsophisticated borrowers with credit scores below 620). In this ruthless world, unsavory loan reps prey on widows, the elderly, the mathematically challenged, and other innocents. These hapless souls often get stuck with mortgage points and interest rates that more than double the going rate for smart, credit-strong borrowers. Often these prey lose nearly everything. To try to keep up with their impossibly high mortgage payments, they deplete their cash, run up their credit card balances, borrow from friends and family—and yet still lose their properties. Unfortunately, journalists slight the other half of this story. Some lenders gouge borrowers at the prime and super prime levels of wealth, income, and credit scoring. Read more... The Application Itself Detects Your Honesty
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