‘First-time homebuyer Sarah bought her house with her husband back in 2020. They also used a variable-rate mortgage with fixed payments, so the amortization would automatically extend as rates rise. At first, it looked like a wise choice. But over the past year and a half, she was shocked to see the length of their mortgage shoot up from a traditional 25 years to more than 70 years.’
See the problem? LOL its like the balloon payment clause from sub-prime that somehow people never thought would become an issue. Also, why on earth would anyone be dumb enough to go with a variable rate when the mortgage rate was already below 2%? You are looking at pennies saved on a downside move, but ruinous losses as rates begin to move higher. Its like shorting a stock that is already down by 99% and not worth the risk.
People are dumb. If the only way you can afford your ‘home’ is to take on extreme risk with exotic mortgages, you CANT afford it. Save more and wait for the market to correct. Being on the wrong end of compound interest is a bad place to be. Now these same idiots are all going to be screaming for a bailout.
h/t bigoledawg7
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