Exotic Mortgages on the Rise in Hawaii

No money down? No problem!

Can't afford the payments? Get an interest-only loan!

The Honolulu Advertiser claims that such previously rare mortgages are rising in popularity:

It's clear why home buyers are attracted to the new mortgage types. Higher prices — the median price of a single-family home was $640,500 in November — and slightly higher mortgage rates have made it impossible for many families to buy a home using a standard 30-year fixed-rate loan with a 20 percent down payment.

Traditional financing leaves you with a monthly payment of $3,347 on a median-priced home at current interest rates, according to Mortgage Plus, a Fort Street Mall mortgage broker. The monthly payment grew by $846 in the past year alone.

The nontraditional mortgages include 40-year loans and interest-only mortgages that can feature either fixed or adjustable interest rates. They generally carry higher interest rates than conventional loans.

There are even Hawai'i buyers taking out so-called "option ARMs," or mortgages under which the borrower can choose to make payments that are less than the interest that's owed. In that instance, the amount of loan increases, or goes into what's called negative amortization.