Adjustable Rate Mortgages
Two years ago, when the housing market was roaring along, I called a mortgage broker on the West Coast and asked for some help. I told him that I wanted to interview some recent home buyers who had taken out an adjustable-rate mortgage — one of the big drivers of the boom — and he was nice enough to pass along a short list of names.
One of the buyers was a business consultant in her 40s. She told me about her charming new house and the fact that she expected it to be a good investment, even if it had cost a bit more than she wanted to spend. Then I asked about her adjustable-rate mortgage.
“I don’t have an adjustable rate,” she said.
Confused, I called the broker again to see what was going on. A little while later, I got a sheepish e-mail message from him explaining that her loan did, in fact, have an adjustable rate. She just hadn’t realized it.
Now, I think this was an honest misunderstanding in which the broker believed that he had explained the terms of the loans more clearly than he had. And the mortgage ended up being a good one for the buyer anyway: she recently decided to move to a new area and sold the house before her rate jumped.