Definition: The mortgage "28" rule, also known as the "50-year-old dog rule," is a legal principle in the United States that applies to mortgages with terms up to 30 years. The purpose of this rule is to ensure that homeowners are protected by the interest payments and other expenses during the initial purchase or refinancing period rather than paying them off at an accelerated rate once the mortgage loan matures. Here’s a detailed definition: 1.

Definition

: "The term of the home loan agreement is called the 28th month (a.k.a. 'mortgage term')." 2.

Explanation

: The term 28 is used in mortgage agreements as a rule to determine how many months must pass before the lender can legally call the home a "closed" or "closed-to-zero" property, which means the loan has been paid off and the mortgage obligation is no longer owed. 3.

Limitation

: This rule ensures that borrowers do not pay more than 30% of their monthly mortgage payment on the first 28 months before they reach the maturity date. 4.

Impact

: This rule can prevent a homeowner from receiving a foreclosure notice or being evicted early, as it guarantees the borrower's right to refinance in good standing and avoid a significant penalty for defaulting. In summary, this rule is important because it prevents borrowers from paying more than 30% of their mortgage payments on the first 28 months before they reach the maturity date, thereby protecting them from experiencing significant consequences if they were to fail to make payments on time.

mortgage 28 rule