Watch out for Exotic Mortgages
With the recent news in the home mortgage industry, exotic loans will be increasingly more difficult to find. Vacation Real Estate Guru, Tori Milan weighs in on the pros and the cons to exotic mortgages and why it is best to play it safe.
Today the real estate and home mortgage industries are in crisis because many mortgage lenders sold bad credit mortgages to folks that may not have been qualified for an A-rated loan. Now many are worrying about foreclosure or bankruptcy. If you have an exotic loan, find out why it may be time to refinance to play it safe and ride out the storm.
Exotic mortgages are designed with affordability in mind. Ironically they became very popular when interest rates were at a 30-year low. Many of the products were designed to offer enticing and affordable low monthly payments to people who otherwise could not afford to own a primary residence or vacation home. These types of mortgages were easy to obtain states Milan. In fact, in may instances prospective home owners were not offered better terms because brokers made more commission on the exotic and higher interest loans. The result is that many homeowners are in over their heads and now may have to sell their homes for less than the purchase price. The issue now is affordability. Milan suggests refinancing to secure better terms and renting the home as a vacation rental to help bridge the gap. Vacation rental incomes can be range from $10,000 and 100,000 and up. That income can tide the owner over for months or years until the market conditions improve.