Is this a subprime mortgage? Has anyone had any experience with them?
2007-01-21 08:39:03 · 2 answers · asked by CEESONE 4 in Business & Finance ➔ Renting & Real Estate
The GPM can be used in an A-Paper or sub-prime loan.
And the previous poster is correct. The loan has scheduled negative amortization. For the first five years, you will owe more than your original loan amount. And in most areas, home prices are barely creeping up now, if even that. This type of loan should be avoided at all costs.
When interest rates and inflation were high in the eighties, people did these loans. The thinking was inflation would mean your income would catch up the the dollar amount of the full payment within two years. But most borrowers got royally hosed. We're talking bankruptcies and foreclosures. But interest rates are now historically low and inflation is virtually non-existant. If you need the GPM to swing the mortgage payment at today's low rates, you are looking at a home that is too expensive for you. Reconsider.
2007-01-21 14:18:14 · answer #1 · answered by CJKatl 4 · 0⤊ 0⤋
A great name for a negative amortization mortgage loan. It is neither sub prime or prime.
This is a term that does not universally apply to this type of mortgage.
If a person know what they are doing, it is a good mortgage. If a person act as the usually person does, they will descend into quicksand.
2007-01-21 16:47:00 · answer #2 · answered by whatevit 5 · 1⤊ 0⤋