Adjustable Rate Mortgage - Are the Risks Worth the Savings
Adjustable Rate Mortgages can save you a lot of money if used correctly. Many homeowners rely on Adjustable Rate Mortgages to purchase their homes because of lower payments and the ease of qualifying. Many of these homeowners get into trouble because they do not fully understand how their Adjustable Rate Mortgages work and cannot afford the payments when their lender resets the loan. Here are the basics to help you understand how Adjustable Rate Mortgages work and the potential pitfalls you could encounter.
Adjustable Rate Mortgages are simply mortgage loans with a variable interest rate that changes periodically at an interval specified in your loan contract. Your Adjustable Rate Mortgage is tied to some financial index, like the prime interest rate for example, and the lender resets the loan to this index and adds their markup at regular intervals. This adjustment period usually takes place every year on your loan's anniversary date. When the lender adjusts your interest rate your monthly payment amount change depending on the direction interest rates have been going.
Adjustable Rate Mortgages come in several different flavors with varying degrees of risk. You can choose an interest only or payment option loan; these loans have significantly more risk than a standard Adjustable Rate Mortgage. Here are some of the advantages and risks associated with Adjustable Rate Mortgages.
Adjustable Rate Mortgage Interest Rate Fluctuation
Choosing an Adjustable Rate Mortgage allows you to take advantage of lower payments when interest rates go down. Falling interest rates can result in significant savings for savvy homeowners; however, rising interest rates result in rising payments. Mortgage interest rates are nearly impossible to predict; if you have a low tolerance for financial risk Adjustable Rate Mortgages are not the loan for you.
Adjustable Rate Mortgages: Introductory Interest Rates
Adjustable Rate Mortgages typically come with introductory rates that are significantly lower than the actual interest rate. During the introductory period your monthly payment amount will be significantly lower; if you need short-term financing this introductory period could save you a lot of money. Many homeowners fail to understand that this lower payment is not their actual payment amount and are shocked to see their payment go up significantly when the lender resets the loan.
You can learn more about your mortgage refinancing options including costly mistakes to avoid by registering for a free mortgage tutorial.
Related Tags: mortgage refinance information, refi home loan, mortgage refinancing
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com
Mortgage Refinance Information Your Article Search Directory : Find in Articles
Recent articles in this category:
- Understand The Fha Guidelines Before Considering Fha Mortgage
The U.S. economy was hit hard by the global financial meltdown. In the housing sector, the crisis is - Basic Facts About Multifamily Apartment Construction Loans
When you make an investment, you surely think of getting something out of it to make the deal profit - Commercial Mortgage Refinance Loan - Ideal Solution For Financial Problems
Financial security is something which we have to plan from before. In life, there is no certainty wh - Free Government Grant Money Eligibility Requirements
All of us hear about free government grant money. But what is involved in obtaining this money? What - Top 10 Tips On Buy To Let Mortgages And Property Hunting
If you are looking for an opportunity to invest your savings or any money you have come into, there - A Few Tips On How To Stop Foreclosure
In case you are facing certain financial catastrophe caused by a loss or relocation of a job, or wha - How To Stop Foreclosure And Lose Your Residence To The Bank
In today's market, there are more and more citizens that get big loans then they use their home as a - Most Excellent Way To Stop Foreclosure - The #1 Blueprint For Saving Your Home
Just what is the best measure to stop foreclosure? No doubt you are browsing for an answer to that q - Act Fast To Stop Foreclosure
If you would like to find out how you can put a stop to foreclosure, there is not much to accomplish - Tips For Buying A Home With No Money
There is a popular belief that you can only buy a home if you have great credit. This is false becau
Most viewed articles in this category:
- Mortgage Refinancing - Rate Caps Protect You When Refinancing With an Adjustable Rate Mortgage
Adjustable Rate Mortgages can save you money when mortgage refinancing if you fully understand how t - 100% Mortgage Loans: What You Need to Know
Coming up with a 20% down payment can be a difficult task for many potential homebuyers. If you are - Home Equity Loan Pitfalls
The home equity loan came of age in 1996 when changes in the tax law eliminated deductions for the i - Mortgage Refinancing: How the Fannie Mae Weekly Yield can Help You Comparison Shop
Mortgage refinancing without knowing Fannie Mae's weekly yield is like buying a used car without kno - How to Pay Off Your Mortgage in 7 Years, Without Extra Payments
One of the most exciting new topics concerning wealth is “How to Pay Off Your Mortgage in - Mortgage Rate Comparison
Trying to get an "apples to apples" mortgage rate comparison can often be quite a hassle. Traditiona - Should I Pay Off My Mortgage Early?
Many people think that real estate debt is good debt. They think that their mortgage is their bigges - Mortgage Refinancing: Beware the Mortgage Vultures
If you are in the process of mortgage refinancing you need to be wary of overpaying for your loan. - Mortage Loans - How Much Does It Actually Cost In The End
Mortgage loans are the loans used to finance most people's first home. It is the big loan that ever - Where To Locate Home Improvement Loan Companies
Where to locate home improvement companies is a question that arises from many different people. Som