What Are Adjustable Rate Mortgages and Who Should Use Them
During the last real estate boom a large number of home owners choose to use ARM loans to purchase or refinance their homes. At the time home values were going up the economy was great and nobody ever thought that adjustable rate mortgage loans would cause such a problem across the world. What Are Adjustable Rate mortgage Loans Adjustable mortgages are home loans that offer a low interest rate that is only fixed for a short period, usually no more then five years. Once the initial fixed rate period expires your interest rate will be reset to a new rate. Often times this new rate will increase causing your mortgage payment to rise a significant amount. How Is My New Adjustable Interest Rate Determined Your new interest rate will be determined by adding your ARM loans margin to the index. The margin of your loan is listed in your paper work you received at the closing table and is normally located near the back.
