What is a 228 mortgage? What should I know about it? Is it a good thing?
2007-01-07 08:06:30 · 4 answers · asked by ajhundley3 2 in Business & Finance ➔ Renting & Real Estate
A 2 / 28 Mortgage is a hybrid type loan that has a fixed then adjustable feature built in. It essentially is a 30 year loan that will be fixed for 2 years then become an adjustable rate loan for the remaining 28. Some of these aren't as bad as most, but the caps, and indexes used are what have the most danger. Often one will use one of these to buy time to fix their credit over the 2 year fixed term. When they have a better credit profile and just as the 28 adjustable term is about to kick in they will refinance. Others will use these, or 3 / 27 loans, for a low initial rate and sell before the adjustable term kicks in. It is typical for these loans to have a hard prepay during the fixed portion of their term. When used as a tool these loans do serve a good purpose in many situations. Sadly most of these loans are just pushed by greedy loan reps to create another see ya in several years client.
2007-01-07 08:39:58 · answer #1 · answered by Kevin H 4 · 0⤊ 0⤋
A 2/28 mortgage is normally what is considered an Alt "A" product and is for individuals that need a little time to get on their feet and correct credit problems. There is another product called a 3/27.
This is a 30 year mortgage in both cases they number in front indicates the number of years the mortgage is fixed. You can keep this loan it will simply adjust. After all it is a 30 year loan.
Yes they are good for what they are designed for and that is buy time until you are in a better position to get a better loan.
Normally a month or so before the fixed rate is over you should refinance into a better mortgage and get a better rate.
If you have paid your bills on time especially your mortgage you will not have a difficult problem refinancing to a new and better rate.
I hope this is the case. You should contact the mortgage broker that got you the loan or another to do your refinance. It will cost you to refinance, but the monthly savings might be a benefit and make the refinance worth it.
Normally all cost to include fees and points are a tax deductable item on your federal income tax. Please check with your tax prreparer for all tax information.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-01-07 16:32:09 · answer #2 · answered by Skip 6 · 1⤊ 0⤋
A 2/28 is basically a 2 year ARM (adjustable rate mortgage). The rate is fixed for 2 years and then it adjusts every year thereafter. The loan payments are amortized over 30 years. Sub-prime lenders offer these loans to borrowers with credit issues. It's often referred to as a "credit repair loan" or a "Band-Aid loan."
2007-01-07 18:23:35 · answer #3 · answered by Anonymous · 0⤊ 0⤋
They are more common for difficult borrowers.. fixed rate for 2 years and then it becomes adjustable. Can be a dangerous loan if you barely qualify.
2007-01-07 18:36:15 · answer #4 · answered by Anonymous · 0⤊ 1⤋