Question: I currently have an adjustable-rate mortgage for a home I purchased a year ago. Now the rates are increasing every other month. Someone suggested I refinance for a fixed-rate mortgage. How does this work? What happens to the previous mortgage and private mortgage insurance?
-- Sybil Eady, Philadelphia
Sybil: Hell is probably pretty crowded right now, but I hope there's a special circle reserved for lenders who make low-interest, adjustable-rate mortgages without adequately explaining how they work and what their drawbacks are.
And I don't mean just handing you a written form along with the mountains of other paperwork you receive when you apply for a loan. I mean talking to you about what could happen under worst-case scenarios -- until you understand your risks clearly.
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