In the September issue of New Homes Magazine, out today, columnist Don DeBat warns of the dangers “exotic” mortgages, like interest-only adjustable-rate loans, pose to middle- and moderate-income borrowers, particularly Latinos and African Americans.
Exotic mortgage products typically offer lower monthly payments than traditional fixed-rate loans early on. But when these loan terms adjust, usually after two to five years, consumers are vulnerable to payment shocks. For example, on a $200,000 home, the monthly payment could rise by 54 percent on an interest-only adjustable-rate mortgage.
Read all about it here.