Today’s adjustable-rate and interest-only loans have been shorn of the toxic features that tripped up many borrowers during the housing bubble. Plan to moveExperts say today’s adjustable-rate mortgages, or ARMs, as well as interest-only loans, are especially suitable for borrowers who expect to move before any rate increases can wipe out the savings in the early years. They’re also useful for sophisticated borrowers wrestling with uneven income, borrowers who expect their income to rise, or borrowers who are willing to bet they can invest their mortgage savings for a greater return elsewhere. The borrower would pay $39,648 less than on the 30-year fixed loan over an initial fixed period of seven years. Today’s interest-only borrowers usually ‘require lower debt-to-income ratios, higher credit scores and larger down payments” than in the past, says David Doyle of Bank of America.

Source: Wall Street Journal March 27, 2017 02:36 UTC