Top 6 Mortgage Mistakes (#1)

by The Real Estate Faction on October 27, 2010

During the 2007-2009 financial crisis, the United States economy crumbled because of a problem with mortgage foreclosures. Borrowers all over the nation had trouble paying their mortgages. At the time, eight out of 10 borrowers were trying to refinance their mortgages. Even high end homeowners were having trouble with foreclosures. Why were so many citizens having trouble with their mortgages.

Let’s take a look at the biggest mortgage mistakes that homeowners make.

1. Adjustable Rate Mortgages

Adjustable rate mortgages seem like a homeowners dream. An adjustable rate mortgage starts you off with a low interest rate for the first two to five years. They allow you to buy a larger house than you can normally qualify for and have lower payments that you can afford. After two to five years the interest rate resets to a higher market rate. That’s no problem because borrowers can just take the equity out of their homes and refinance to a lower rate once it resets.

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