With all the new financing programs available, the Adjustable Rate Mortgage (ARM) still reigns as the most popular alternative to the traditional thirty-year fixed-rate loan. ARMs begin at lower interest rates, making it easier for many buyers to qualify. If you have an ARM, your interest rate is adjusted to one of the several indexes at specified times so that you could bear an extra financial burden at rate adjustment time. Most ARMs have two-percent rate adjustment caps with lifetime caps so that you can anticipate the worst-case scenario beforehand.
The good news is that while short-term trends are not known, experts such as Kiplinger’s Magazine, predict moderate rates for the rest of the decade. There is one type of convertible ARM which allows you to switch over to fixed-rate during the first five years.
These loans are attractive, but be sure to read the fine print It costs to convert loans and the new fixed-rate will probably be a point or two above the going fixed-rate. This could be very appealing if you see stormy financial seas ahead.
For professional advice on all aspects of mortgage financing, contact Paul Banas at 633-5888 or visit his office at 27 N. Long Street, Williamsville, NY 14221.
Registered Broker NY State Banking Dept. 3rd Party Loans.
Independent Mortgage Broker.