How to Save Money on Mortgage Interest Like They Do in the Netherlands

Adding the name of a foreign nationality to a product is a time-honored marketing gimmick.  Everyone loves French toast and German chocolate cake, even if the closest equivalent in their namesake countries bears little resemblance to the product we look forward to buying from Denny’s or Giant Eagle.  Even things that are profoundly unpleasant when we tack the name of an aspirational vacation spot to them.  Decluttering and estate planning are two of the tasks that lend themselves most easily to procrastination, but call it Swedish Death Cleaning, and seniors will drop everything and get started on a manageable decluttering project.  Can a glamorous European nationality make debt seem appealing?  The Hill website recently published a story that could lead to demand for Dutch style mortgages, the system of home mortgage lending prevalent in the Netherlands.  If you are struggling to keep up with the payments on your home mortgage, contact a Philadelphia mortgage foreclosure lawyer.

Imagine a Mortgage Were the Interest Rate Automatically Gets Lower as You Pay It Down

According to The Hill website, the usual way of issuing home mortgage loans is for the interest rate to get gradually lower as the borrower pays down the principal.  The rationale for this system is that the loan becomes less risky for the lender as the outstanding balance becomes lower and as the borrower builds up a history of consistently making payments.

It stands to reason that American homebuyers would welcome Dutch style mortgages.  Under the current system, the best you can hope for is a fixed rate mortgage, and the only way to get an affordable fixed rate is to be wealthy enough that you have a good credit score and can afford a sizable down payment and to buy when mortgage rates are relatively low.  According to Dan Roccato, a professor at the University of San Diego, several obstacles stand in the way of Dutch style mortgages becoming widely available in the United States.  First, refinances make up a substantial portion of all mortgage loans issued, so lenders would lose out on business if no one needed to refinance, since Dutch style mortgages effectively refinance themselves.  Second, investment purchases are a large part of the residential real estate market, and mortgage interest does not eat into an investor’s monthly budget the way it does for people who own only the house that is their primary residence.

The Next Best Thing to Dutch Style Mortgages

If you have a home mortgage today, consider yourself lucky; it is notoriously difficult to qualify for a home mortgage these days.  It is worthwhile to renegotiate the terms of your mortgage or ask for a forbearance so that you can avoid foreclosure.

Contact CONSUMERLAWPA.com About Mortgage Trouble

A Philadelphia consumer law attorney can help you if you are falling behind on your home mortgage payments.  Contact CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

thehill.com/homenews/nexstar_media_wire/4579477-could-dutch-style-mortgages-work-in-the-us/