Unexpectedly great jump in mortgage installment amount, such as an increase of 30 percent to 100 percent or more. All discount rate and adjustable rate mortgages have this "built in time bomb" that, in a few months or years, causes the payment explosion. As the grace period comes to its end, the higher interest rate become applicable and the charges not included in the beginning payments now fall due. This problem is compounded by the reluctance of investors to buy mortgage backed securities after the subprime fiasco.
Related information about payment shock:
- Payment Shock Definition | Investopedia
Payment shock can be the result of several things, including the expiration of an initial or temporary start interest rate (sometimes known as a teaser rate), the ...
- Payment Shock | The Truth About Mortgage.com
Payment shock can be defined in a number of ways, but it is essentially any significant increase in monthly liability that heightens the risk of loan default.
- Payment shock | Mortgage Reference Library
Payment shock. For many first time home buyers or current homeowners looking to move up, can be in for a shock. Even if they are aware of the higher payment ...
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Debt Ratio Waiver Request/Payment Shock Form. Use whenever the PITI ratio is > 29.00% or TD ratio is > 41.00%; or Payment Shock = 100% or higher; or the ...
- What is payment shock? definition and meaning
Definition of payment shock: A considerable increase in an ARM payment that ... Payment shock could also refer to the sizable difference in the rent paid by ...
- For Many Home Equity Loans, Payment Shock Is Near - NYTimes.com
Jul 14, 2012 ... The easy terms of many home equity lines of credit are about to end, as borrowers will have to start paying principal as well as interest.
- Payment Shock: Definition from Answers.com
Payment Shock Said to occur when the monthly payment rises sharply at the first rate adjustment in an Adjustable Rate Mortgage (ARM) after an introductory.
- Payment Shock - Financial Dictionary - The Free Dictionary
A very large increase in the payment on an ARM that may surprise the borrower. See Adjustable Rate Mortgage/How the Monthly Payment on an ARM Is ...