Good news at last. It took a while. The last several weeks have been tough. The real estate headlines just about everywhere have oozed with subprime troubles this and foreclosure that and home values are dropping and so on. Followed by long and dark narratives about new regulations and who is to be blamed for what. Now the beam of light is shining on a new home loan program from Washington Mutual. At least for the time being.
It's called Mortgage Plus. People who are looking for more flexibility and control are going to be dancing in the streets. It actually combines a first mortgage and home equity line of credit into a single loan. The borrower can reset the interest rate twice a year, for free for the first time and then it's $250. He can also pick between fixed and variable rates, fully-amortized payments or interest-only. Additionally, there's no need to refinance to benefit from the accumulated equity in the home. He can just write a check to tap into it, or do a cash advance or even use a credit card, if approved. These are merely some of the components of the program.
It appears very tempting. As always, it's my advice to fully understand what it all means before signing up. It'll definitely work for some consumers, but not for others. And keep in mind, our competitive marketplace already offers similar programs, so it's not like the invention of the decade. The product is not available to subprime borrowers, though. And lastly, how are they going to price it? So long as that's reasonable, it should be able to find its niche.