Consumer advocates say most people learned about mortgages from their parents and grandparents, who typically put down 20 percent on a 30-year fixed loan on which they always knew what their payments would be. Those longstanding assumptions have been challenged in recent years by the rapid proliferation of new loan products with looser credit requirements and fluctuating payment plans. Although the newer mortgage products allow almost anyone to buy or refinance a house, consumer groups say the loans often contain land mines hidden in the fine print.

Alternative mortgage loans were designed for a handful of people with promising long-term earnings potential: young lawyers destined to make partner, doctors finishing medical school or stock brokers who get large commission checks several times a year.

But as housing prices have surged, outstripping wages in the most expensive markets, alternative financing has become a popular path to homeownership.

These new loans come in many forms. “Nontraditional” mortgages allow borrowers to pay only the interest on the loan or even only a portion of the interest each month, without being required to pay down the principal. Nationwide, more than a third of borrowers who got loans in the first nine months of 2006 got nontraditional loans, up from about 2 percent in 2000, according to First American Loan Performance, a real estate information firm.

For more information on this and other real estate matters, your first source for Palm Beach real estate should be licensed agent and long-time resident Caesar Parisi.

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