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Exotic finance does not make housing affordable

Posted on 15 March 2013

Let’s consider the case of a $250,000 interest only mortgage with a fixed rate of 4 percent that begins to amortize after 10 years. Its monthly payment for 10 years will be $833, after which it jumps to $1515. Suppose a family decides that $833 per month is at the edge of affordable.
This means that in 10 years, its income must have risen by 81 percent, or about 6 percent per year for every year, for the payments to remain affordable. This might happen–it also might not…………………………………Full Article: Source


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