When Your House Payment Jumps

When Your House Payment Jumps

 

The mortgage party of 2003-06 is so, so over.

 

Darci Rickson now wishes that she'd looked closer at the fine print. So do Norman and Margaret Paige. And doubtless thousands of others — soon to be millions — whose cheap, fixed-rate introductory periods are about to expire.

 

The owners of about 7.7 million adjustable-rate loans taken out in 2004 and 2005 — about $1.89 trillion worth — face higher house payments in the next two to three years, says Christopher Cagan, the research director for First American Real Estate Solutions of Santa Ana, Calif. That's about a fifth of all mortgages outstanding in the U.S. right now.

 

These are not traditional mortgages. Rather, they are complicated, sometimes bafflingly intricate contracts loaded with changing rates and back-end details that trip up unsophisticated borrowers. One category, subprime loans, is aimed at the poor, minorities and people with bad credit — in other words, those who can't, or think they can't, get a loan by other means.

 

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