Pick the Right Home
Loan - Adjustable Rate Mortgages (ARM) Give Lenders More Security -
Easier To Qualify For Than Fixed Rate
July 15th 2006
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Home Loans |
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Now that interest rates have been on the rise and may go higher, fixed
interest mortgages may be harder to get. The adjustable rate mortgages
give the lender a bit of security in uncertain times. If interest rates
go up, their rates can also go up.
There are some advantages to the adjustable rate mortgage and there are
some advantages to the fixed rate mortgages. You can get some lower
initial payments with an adjustable rate mortgage. It is also easier to
qualify for an adjustable rate mortgage.
For the long term, if rates are relatively low, fixed rate mortgages are
usually better. You can budget you month to month bills without an
increase in payments. If interest rates are in the double digits, an
adjustable rate mortgage would be better.
Interest Only loans have become very popular lately. One popular loan
functions as an interest only loan and converts to either a fixed or
adjustable rate mortgage after a specified period of time (like 10
years). This is a great idea for people that either plan on moving
within 10 years or expect to make more money after that period.
Lenders may also offer you a temporary fixed rate mortgage. This could
be a 5-year fixed rate loan and then converts into an adjustable rate
mortgage. This could be good if you plan on getting a new mortgage
within 5 years or if interest rates start to decline.
Loan brokers can be helpful, but remember they get paid too. They are a
middleman, but like with anything else (like real estate agents) loan
brokers can add value to your loan search. Brokers can get your
information once and shop for a home loan without running your credit
each time. Each time your credit is run it shows up as an enquiry. If
you get too many enquiries, your credit score could be lowered.
Hopefully you do your homework before deciding on a broker or lender.
Always make sure you read and understand all of the terms before you
sign on the dotted line.
Dan Wilson
Best Syndication
Books on
Lending
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