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The Rise in
Popularity
of
ARMs |
You would think most
people
would prefer a fixed rate mortgage instead
of a loan with an adjustable rate, such as an
ARM (adjustable rate mortgage). However, home buyers
are applying for ARMs at an amazing
rate – even when interest rates are
on the rise!
The reason?
Even though interest rates have a tendency to fluctuate,
they’re still a couple of percentage points below what
most fixed rate interest mortgages are –benefiting the
consumer in the long run.
Many home buyers
are even combining the two ideas, using hybrid ARMs,
which have a fixed rate for the first five years and an
adjustable rate thereafter. This is especially
popular with homeowners who aren’t sure if they plan on
staying put after 5-7 years.
If you’re certain
you’ll be planting your roots for a lifetime, then a
fixed rate mortgage would probably work better for
you. But those who move around or upgrade every so
often should highly consider looking into an
ARM.
Even if you’re
undecided about the length of time you’ll be in your
home, you can sign up for an ARM and then refinance
using another ARM once your fixed rate period is
expired.
What happens if
you have a hybrid ARM and your fixed interest rate is
about to change? You’ll usually be given several
months’ notice of what your new payments will be,
allowing you to adjust your finances.
If you find the
payments will be too severe, you might consider
refinancing or moving to another home with lower monthly
payments. Don’t be afraid of looking into an adjustable
rate mortgage – the fact that rates can change can
actually work in your favor – not always against
you.
© 2004 - All Rights Reserved. Apex Personal Loans
Store does not assume any responsibility for the
accuracy or completeness of the above article. Please
consult a financial advisor for specific advice
pertaining to your particular situation.
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