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So the subprime borrower had a loan at 4% for 30 years. Now they can refi at 8% for 40 years or even 50 years and keep their payment relatively stable. May not be the ideal solution for them but it will work. Those interest payments are tax deductable and they'd have to pay rent if they weren't financing a home.
Remember that in the early 1980's mortgage rates were around 9% to 11%!!!
Remember, the number of homes that will go into forclosure is a very small percentage of all homes.
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