I read a comment on a post about high rent that said that, “[they probably] bought a $550,000 house with a built in basement suite to help cover [their] 2.1% mortgage 4 years ago and [they] just had to resign at 6.8%”.
Please what renewing or resigning means in this context. I’ve never bought a house and I barely know about mortgages from movies. TIA!
In: Economics
That’s not a thing. When you sign a mortgage agreement that’s it, the only thing that can change is the interest rate if it’s a “variable rate” mortgage but those are rare these days. Mortgages are agreements basically written in stone.
It sounds like maybe they had a 2.1% variable rate loan that ballooned up to something ridiculous and had to refinance a new mortgage at current market rates which would be around 6.8%. Still better than paying 12% or whatever they got fucked on with the variable rate. But they had to have seen it coming, it’s in the contract.
I actually had a pretty low variable rate loan when I bought my house in 2004 but I had a good finance guy and he made sure there was a clause that it could only go up so much per year. But by 2019 it finally got up to a little over 5% so I refi’ed at 3.625% (should have waited a few more months to get below 3% but it is what it is), and that’s a 30 year fixed rate. It will *NOT* change unless I refinance (I would never do that unless it dropped into the 2% range) or the apocalypse happens.
I don’t know what “re-signing” means but refinancing is definitely a thing. It just means you’re not happy with your current loan so you get a better one. A mortgage is a product, if you don’t like it then you try to get a better one depending on whether the loan market has what you want available. Right now low interest mortgages are extremely hard to come by (lack of supply) but lots of people want them (high demand). That wasn’t the case 5 years ago. It’s cyclical.
Latest Answers