Definition: The term "mortgage keeps going up every year" refers to a situation where homeowners are paying more in mortgage interest than they initially borrowed, as the price of their home increases over time due to inflation or other factors. To define this phrase accurately, it is essential to understand how the interest rate on mortgages fluctuates and what impact this can have on home values. 1.

Interest Rate Changes

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Mortgage Rates

: The key factor that influences mortgage rates is typically the fed funds rate (the federal fund rate), which affects bank lending to individual banks. -

Inflation

: Inflation, as measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI), can cause home prices to rise over time due to higher demand for housing and supply chain factors. When inflation pushes up mortgage rates, it means that home prices will eventually come down in order to counteract the rising rates. -

Home Values

: The value of your home decreases when its price increases relative to other assets. 2.

Home Value Impact

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Price Increase

- Home values rise due to increased demand for housing. -

Loss of Income

- Rising mortgage payments can lead to a loss of income and financial hardship for homeowners. -

Financial Struggle

- Home values may not be enough to meet the rising payments, leaving some homeowners in debt or even unable to pay their loans. 3.

Mortgage Consolidation and Repayment Process

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Mortgage Consolidation

: This involves combining multiple mortgage loans into a single loan with a lower interest rate. -

Repayment Process

: With multiple mortgages, borrowers may experience difficulties in paying off the principal balance of each loan. For some homeowners, this can lead to financial strain and even bankruptcy if not managed properly. 4.

Impact on Financial Wellness

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Financial Stress

: Home mortgage payments are a significant source of stress for many people who have struggled with debt or credit card debts. -

Debt Management

: Poorly managing home mortgages can lead to additional financial difficulties in the future, such as higher insurance premiums, loss of rental income, and potential foreclosures. Overall, "mortgage keeps going up every year" is a complex term that reflects the ongoing issue of rising mortgage interest rates due to inflation or other factors. Managing debt and avoiding overpayment can help homeowners avoid financial hardship in the long run.

mortgage keeps going up every year