Sub-prime interest rate mortgages

Sub-prime interest rate mortgages were given with interest rates below the prime rate with an automatic increase to the standard rate usually within two years.Christian Dior Sunglasses People could now qualify for the new lower rate that could not have qualified for the standard rate.? Home owners believed they would be able to afford the new rates within two years or they could simply refinance to a new mortgage hoping the prime interest rate would continue to drop.

Well, the prime interest rate went up and now home owners were faced with mortgages that increased two, three or even four hundred dollars a month with no way to qualify for a new mortgage.? Could you pay four hundred dollars more for your home mortgage and not feel the bite?

One thing to remember when trying to understand how these sub-prime mortgages affect the economy overall is that rarely does a mortgage company or bank itself actually carry mortgages as debt themselves.? Typically what they do is turn around and sell those mortgage notes to larger banks and investment firms.? These investment firms and banks then use those mortgages as collateral or as part of their overall financial portfolio in order to sell bonds against their value.? There are only a few major banking institutions that actually carry mortgages, including sub-prime mortgages, which mean that when people start to default on their Replica Oakley Sunglasses, home loans this does not affect just a small fly-by-night mortgage company.? Those larger banks and institutions now have a large part of their financial portfolio that is beginning to fold.?