Higher Mortgage Payments are Coming! Borrowers with Home Equity Lines of Credit (HELOCs) are likely to see their monthly mortgage payments rising in the coming new year. This is the result of interest rates quickly increasing since the presidential election of 2018 ended. Fortunately, borrowers with a fixed-rate mortgage will be fine but families with adjustable rates will find a sudden increase in payments over the next year. Some of the increases could amount to an extra $100 or more per month. However, the increase is base on the size of the borrower’s loan amount.
Among HELOC borrowers from 2005 to 2008 who have loans resetting within the next two years, 53% said they were unaware about the reset impact to the monthly payments.Many HELOCs from the housing rising period had a 10-year draw period, that’s when borrowers paid the interest only on the loan, and then started to make payments toward the principal after that.
“For those that have a high balance, clearly their payment will increase, and it will cause some prepayments” Sam Khater, an economist with CoreLogic, told CNBC. “But rates simply reflect the supply and demand for money, and that is the growth rate in the economy.”
Source: “One of Your Monthly Housing Bills May Get Bigger,” CNBC (Dec. 7, 2018)
“Many Borrowers Unaware Higher Payments Coming” Realtor Magazine