Option ARM -- another way to say rent.
2008-02-07: Exploding ARMs
Feb. 7 (Bloomberg) -- Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000.
The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can't afford.
"We're barely making it right now,'' Ripplinger said.
"I never heard of a payment-option ARM before,'' said Ripplinger, the Minnesota borrower. "We thought they were putting us on a 30-year fixed. They didn't put us on a 30-year fixed. I believe that's why a lot of people are losing their homes now.''
If he's barely making it on $565/month in rent, how could he have made the payments on a 30-year fixed?
He's 66 and he's looking for a 30-year mortgage! LOL
Bubble? What bubble??