Payment shock
Payment shock
Payment shock refers to the effect that a sudden increase in a loan's minimum payment can have on a borrower. Many mortgage loan products are structured to have potentially large changes in the minimum payment amount. Examples include ARMs with low teaser rates, and interest-only loans that later convert to fully amortizing loans. From a lender's perspective, payment shock is a risk, because the sudden increase could result in borrower default.
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National Rates
| Loan Type | Today |
|---|---|
| 30 yr fixed | 4.85 |
| 15 yr fixed | 4.39 |
| 5/1 ARM | 3.69 |
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