Adjustable Rate Mortgages Offer Alternatives For Home Buyers - part 2

by W. Troy Swezey

An Adjustable Rate Mortgage is a home loan with an interest rate that fluctuations with market interest rates. Instead of paying the same rate of interest over the life of the loan, as you would with a fixed-rate mortgage, you usually pay a lower interest rate the first four or five years. Your interest rate then changes in accordance with certain rate indexes.

However, ARMS come with maximum caps on how much the interest rate can increase in a single period (usually a year) and how high the rate can go during the entire life of the loan. Usually, the overall maximum cap is six percentage points, and the annual cap is two points.

Related Adjustable Rate Mortgage Articles:

Adjustable Rate Mortgages - Interest Rate Strategy
Over the last few years, many people squeezed into new homes using adjustable rate mortgages. With interest rates going up, you now need a new interest rate strategy.

Adjustable Rate Mortgage - How They Work?
The borrowers adjustable interest rate mortgage is determined initially by the cost of money and the time the loan is made.

Adjustable Rate Mortgages - Determining Rates
Adjustable rate mortgages are to home buyers as carrots are to bunnies - very tempting. The secret to figuring out if an adjustable rate mortgage is a good deal is the rate index used.

Has Your Adjustable Rate Mortgage Become A Gamble?
Rising interest rates over the last two years have adversely affected millions of homeowners with adjustable rate loans. Buyers who took out adjustable rate mortgage loans three years ago to buy more expensive homes are now facing huge payment increases.

What Is An Adjustable Rate Mortgage Or ARM?
This article is a short explanation of what an adjustable rate mortgage is. Our goal is to help a buyer understand different types of products during their home purchase or refinance experience.

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