By G. M. Filisko, contributing writer, HouseLogic
Fixed- or adjustable-rate mortgage? How do you answer that perennial buyer question?
Get the 411 on finding the right home loan—including eight questions buyers should ask themselves before choosing an adjustable-rate mortgage—from the free August “Financing Your Home Purchase” article package now at the REALTOR® Content Resource. Here’s just some of the information on adjustable-rate mortgages you’ll find there:
- An ARM does just what its name implies: Its interest rate adjusts at a future date. It moves up and down according to a particular financial market index, such as Treasury bills. Typically, ARMs include a cap on how much the interest rate can increase, such as 3 percent at each adjustment, or 5 percent over the life of the loan.
- ARMs can be a good choice if you expect your income to grow significantly in the coming years. ARMs also often offer a lower interest rate than fixed-rate mortgages during the first few years of the mortgage, which means big savings for you—even if there’s only a half-point difference. But if rates go up, your ARM payment will jump dramatically. Continue reading »