Bargain interest rates for metro homeowners at an end
Thousands of struggling Michigan homeowners who got a break on their mortgage during the financial crisis will get a letter this year with a bit of bad news.
It’s a notice that their monthly mortgage payment is going up.
The five-year limit on many federal mortgage-assistance modifications is ending. Interest rates will inch up to more realistic rates. Mortgage payments will go up between $50 and $100 a month initially — and possibly creep up further in a few years. The jumps would vary based on the size of the mortgage and when the mortgage was modified.
After all the interest rate step-ups take place, the cumulative monthly payment increase would be about $200 for a typical loan, according to the Making Home Affordable data.
In Michigan, where about half of the more than 40,000 modified loans come from metro Detroit, the average increase will be $127 a month.
The big question: Has the economic recovery been strong enough to enable many people to afford higher payments? Or could some be heading for trouble again?