To All Depository Institutions and Others Concerned
in the Second Federal Reserve District:
The federal bank, thrift, and credit union regulatory agencies have announced the publication of a new resource that can help consumers make more informed choices when considering nontraditional mortgage loans.
Interest-Only Mortgage Payments and Payment-Option ARMs—Are They for You? features a glossary of lending terms, a mortgage shopping worksheet, and a list of additional information sources. This information can help consumers, whether buying a house or refinancing a mortgage, decide if an interest-only mortgage (an I-O mortgage) or an adjustable-rate mortgage (ARM) with the option to make a minimum payment (a payment-option ARM) is right for them.
The publication stresses the importance of understanding key mortgage loan terms, warns of the risks consumers may face and urges borrowers to be realistic about whether they can handle future payment increases.
See the press release for full details.