"Is there any type of mortgage that is particularly vulnerable to abuse?" No mortgage is abusive in itself. However, the more-complicated ones offer more opportunities for unscrupulous loan providers to take advantage of unsophisticated borrowers. Adjustable-rate mortgages are complicated, as are fixed-rate mortgages with special features. One such fixed-rate mortgage, the simple-interest biweekly (SIBW), is the subject of this article. Over the years, many borrowers have written me about the wisdom of refinancing their mortgage with an SIBW offered by one major lender. In all cases reported to me, the interest rate on the new SIBW would be higher than the rate the borrowers were paying on their current loan. In every such case, I advised against the loan. In a financial emergency where a borrower needs either additional cash or a lower monthly payment, it might be necessary to refinance into a higher-rate mortgage. If the objective is to lower interest cost, however, refinancing at a...
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