Big monthly payment increases when Option ARMs reset
Option adjustable rate mortgages allow borrowers to pay a minimum monthly payment less than the mortgage interest due—but only for a finite timeframe, at which point the monthly payments are reset (eg up 40%) to reflect the new scale of the loan.
Immediately related elementsHow this works
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The Global Financial Crisis »The Global Financial Crisis
Potential consequences of the financial crisis? »Potential consequences of the financial crisis?
More financial institutions will collapse »More financial institutions will collapse
Financial institutions will suffer further capital losses »Financial institutions will suffer further capital losses
Financial institutions forced to write off bad debts »Financial institutions forced to write off bad debts
Many homeowners will default on mortgage and loans »Many homeowners will default on mortgage and loans
Wave of option adjustable rate mortgage deafults to come »Wave of option adjustable rate mortgage deafults to come
Big monthly payment increases when Option ARMs reset
Double bind of increasing debt and falling equity »Double bind of increasing debt and falling equity
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