Beware of the Adjustable Rate Home Mortgage
In today's housing market, qualifying for a home mortgage for a house that is decent can be hard. In some areas, prices have more than doubled in three years. That leaves many buyers scrambling for financing. One option is the adjustable rate home mortgage, or ARM.
An ARM can get you into a house buy offering a lower interest rate, and thus initial payment, than other types of home mortgages. Since the amount that you can borrow is based on the size of your payment, an ARM may get you into a better house. But beware, not all ARMs are the same.
The simplest ARM is a home mortgage whose rate is readjusted periodically, much like your credit card. If rates are falling, this means that your payments will fall, too. However, if mortgage rates rise, you could be looking at a very large monthly payment. This is the home mortgage to be most cautious of. Often, interest rates go high at the same time as unemployment. So you could be looking at no job and a very high home mortgage payment. This is a classic set-up for foreclosure. So avoid this loan, if at all possible.
The next type of ARM called "reward" home mortgage. It starts out at an interest rate, and then, if you make all your payments on time for a certain period, your interest rate falls! If you have a very good home mortgage broker, you may be able to get this home mortgage. Ask about it.
A less extreme version of the first ARM is the ARM that is readjusted only once or twice. Normally this is at 3 years. This is because that is when your home mortgage company plans on selling your loan. This loan is riskier than a fixed rate home mortgage, but may allow you to get into a better house. Also, since it is only readjusted a few times, you have a much better chance of not getting stuck with an enormous payment. This loan is often offered at times when the home mortgage companies think that rates are too low, so they are betting that rates will increase. Just as you are betting that mortgage rates will go down. But, it is a hedged bet.
Finally, there is the ARM that allows you to decide when to change rates. Normally you can only do this once. This is really useful if you are young or have other circumstances where your credit rating will improve. By watching mortgage rates carefully, you have a good chance at lowering your payments. But read the fine print carefully. You are probably paying in some other way for this luxury. You can't be too skeptical.
An adjustable rate home mortgage can be many things, so shop carefully. Most likely, the home mortgage for you is out there. You just have to find it. Your home mortgage may outlast your husband, so spend a few nights considering the proposal. After all, a home mortgage won't cry if you tell it "no". But that is under the heading "Why home mortgages are better than men". Good luck.
Be sure to visit this website.
http://www.homemortgage-tips.info
An ARM can get you into a house buy offering a lower interest rate, and thus initial payment, than other types of home mortgages. Since the amount that you can borrow is based on the size of your payment, an ARM may get you into a better house. But beware, not all ARMs are the same.
The simplest ARM is a home mortgage whose rate is readjusted periodically, much like your credit card. If rates are falling, this means that your payments will fall, too. However, if mortgage rates rise, you could be looking at a very large monthly payment. This is the home mortgage to be most cautious of. Often, interest rates go high at the same time as unemployment. So you could be looking at no job and a very high home mortgage payment. This is a classic set-up for foreclosure. So avoid this loan, if at all possible.
The next type of ARM called "reward" home mortgage. It starts out at an interest rate, and then, if you make all your payments on time for a certain period, your interest rate falls! If you have a very good home mortgage broker, you may be able to get this home mortgage. Ask about it.
A less extreme version of the first ARM is the ARM that is readjusted only once or twice. Normally this is at 3 years. This is because that is when your home mortgage company plans on selling your loan. This loan is riskier than a fixed rate home mortgage, but may allow you to get into a better house. Also, since it is only readjusted a few times, you have a much better chance of not getting stuck with an enormous payment. This loan is often offered at times when the home mortgage companies think that rates are too low, so they are betting that rates will increase. Just as you are betting that mortgage rates will go down. But, it is a hedged bet.
Finally, there is the ARM that allows you to decide when to change rates. Normally you can only do this once. This is really useful if you are young or have other circumstances where your credit rating will improve. By watching mortgage rates carefully, you have a good chance at lowering your payments. But read the fine print carefully. You are probably paying in some other way for this luxury. You can't be too skeptical.
An adjustable rate home mortgage can be many things, so shop carefully. Most likely, the home mortgage for you is out there. You just have to find it. Your home mortgage may outlast your husband, so spend a few nights considering the proposal. After all, a home mortgage won't cry if you tell it "no". But that is under the heading "Why home mortgages are better than men". Good luck.
Be sure to visit this website.
http://www.homemortgage-tips.info
posted by mileslancaster at 11:17 PM
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