Achtung ! Stay Away From Adjustable Rate Mortgages ... - part 1

by Guru Bhakt

If you are thinking of mortgage refinancing then there is one thing you might want to know and that is - you should stay away from ARMs ( adjustable rate mortgages ) ...
And if you are wondering why anybody would want to do that, especially since ARMs promise such low interest rates, well here's why ...

Adjustable rate mortgages are a great idea when the interest rates are all set to go down for the next several years ...

And interest rates go down only when the Government wants to increase consumer spending. Interest rates go down when the Government is looking at ways to stimulate the economy, boost consumer spending ...

But you might want to ponder whether this is the case now ...

Consumer spending is extremely good and real estate prices are increasing at record growth rates that may not have been seen before. In fact, in some areas the rates are so high that some experts are actually wondering if anyone but the really rich can actually own property there.

And if the real estate prices keep increasing at the same or even higher rates for a long time, then possibly only the rich will actually be able to buy any houses in many areas ...

And if that happens, the housing markets might actually see steep fall in prices because most of the people cannot afford houses ... and due to this, lots and lots of houses might remain unsold.

Would that be a healthy trend then ? If you think it's not, well ... that might be something even the Government might not want that to happen ...

And what do they do to prevent very high inflation ... like what is discussed above ?

The answer : They increase the interest rates ...

And when interest rates increase, adjustable rate mortgages increase too ... and if the interest rates increase significantly, the adjustable rates increase significantly too ...

Read the end of
Achtung ! Stay Away From Adjustable Rate Mortgages ...

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Related Adjustable Rate Mortgage Questions:

Other resources for Adjustable Rate Mortgage

Adjustable rate mortgage payments?
i just purchased a home with an adjustable rate mortgage and am starting to make payments and have several options...is it better to add more to the principal or escrow as opposed to just paying the interest only payment..for instance my payment is 00.00 and i usually but not always have some extra let's say 0 extra to put on the house payment...i have the choice to put the extra on the principal or escrow? which is the best
read answers...

Adjustable rate mortgage calculations.......?
My arm will adjust from 5.5% in December 2007. I'm not sure we will refi since we plan to move from this home in the fall. However, if we do stay (in case home takes longer to sell) what will interest rate adjust to? Prime is at 8.75% now? Does it adjust to that rate? Just asking.....
read answers...

I have an adjustable rate mortgage at 5.785 that will adjust again in Sept. 07.?
Should I fix now or wait to see if the rates go down this summer?
read answers...

Can you explain adjustable rate mortgage type 2/28?
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I have an adjustable rate mortgage at 9.25%, that isn't due for another year.?
if i refinance now , at a lower interest rate, on a fixed rate mortgage, .......would it be wise to pay the prepayment penalty versus the interest i would be paying for the next year? the way i figure it, i paid ,000 in interest in 2006. my penalty for early pay off would be about ,000, and they would roll it in to the loan.
read answers...

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