| There's a lot to take into consideration when looking at | | | | the start. Well, the "3" in the 3/1 means that the 4.50% |
| current interest rates because it's possibly a decision | | | | stays the same for 3 years no matter what. Then it |
| that you're making for the next 30 years. The two | | | | adjusts up or down at a maximum of 2% with the |
| basic mortgage loans are a fixed rate mortgage and a | | | | new current interest rates. So if the new interest rate |
| ARM rate, or adjustable rate mortgage. One isn't | | | | is 6.0% then yours will jump 1.50%. You should use a |
| better than the other, but they are better for your | | | | free mortgage calculator to see that it'll increase your |
| situation compared to someone else's. | | | | monthly payment by a lot. Then the "1" in the 3/1 |
| You can use a Mortgage Calculator to determine the | | | | means after the 3 years go by, the interest rate only |
| best monthly payment available. All the different types | | | | stays the same for 1 year at a time. It could be a lot of |
| of loans have different interest rates and different | | | | added pressure to the already high stressed home |
| factors to take into consideration. | | | | buying experience. |
| A Fixed Rate Mortgage is the most popular loan | | | | ARM rates are a great idea when interest rates are |
| available. It's an interest rate that stays the same over | | | | high, like 20 years ago when the were in the teens. |
| the course of the loan no matter what. If you get a | | | | The odds are higher that they will drop because |
| 5% fixed rate and interest rates shoot up to 10% you | | | | they're abnormally high. When rates are this low |
| still only have to pay the 5%. Also, if you get a rate of | | | | however, you're much better off choosing the fixed |
| 15% and interest rates go down to 6% you can | | | | rate. |
| refinance for cheap and save a lot of money on your | | | | Sometimes people only plan to own for 2-3 years |
| monthly payment. That's why it's the most popular. | | | | when they're buying a home. Then you can go after |
| An ARM Rate mortgage is the next level up in the risk | | | | the 4.50% for 3 years because the interest rate wont |
| category. You might see something like 3/1 year ARM | | | | change over that amount of time. Other than that |
| rate. Let's say you can get 4.50% which is better than | | | | situation, I don't see any reason to get an ARM rate in |
| the fixed rate of 5% so it looks more attractive from | | | | this economy. |