| AN ARM (Adjustable Rate Mortgage) has several | | | | interest rate increases. |
| disadvantages, and they should all be considered | | | | If you plan on being in your home for over 5 years, |
| before going into a home loan deal with this specific | | | | the best bet is you want to build equity into your |
| program. If you are on a tight budget, then is | | | | home, which an Adjustable rate mortgage's low |
| definitely not for you. Payments can increase month | | | | payment plan prevents you from doing. |
| to month. | | | | An Adjustable Rate Mortgage is best if you are |
| Payments can vary month to month by a couple of | | | | planning on just investing in your home, and don't plan |
| hundreds of dollars to thousands, depending on your | | | | on staying in it for more that 5 years. You are |
| program. Your rate is adjusted with inflation. That | | | | gambling that the home values will go up, and you |
| means when the FED increases their rates... your | | | | can cash out before the program comes due. Millions |
| payments go up, up up! | | | | of people have try playing this game, and you really |
| The only way to really win in an ARM program is to | | | | don't want to. The simple fact is that the financial |
| pray that interest rates go down, WHILE your home | | | | game is not to be played with when you consider it |
| value goes up. History has show these two events | | | | is your family's financial stability that you are gambling |
| rarely occur at the same time. On one hand if your | | | | with when you choose an ARM home loan program. |
| home values are going up, that mean sellers are | | | | Think long and hard on how you are going and |
| selling at a higher rate, and buyers are getting hit | | | | calculate if you will be able to financially pay a |
| hard with fees and high interest rates since it is a | | | | monthly varying payment. |
| seller's market. If interest rates are going down, that | | | | Another disadvantage of an ARM is that you can not |
| means there are more buyers out there than there | | | | set a proper financial budget for you and your family. |
| are sellers. This in return drives home prices up. Well | | | | Since the next monthly's payment is going to be a |
| that's your idea goal right? Wrong. Notice I said home | | | | guess you could find yourself in deep water, in cases |
| prices, not the value of the homes. If you are buying | | | | of emergency. It is very difficult to create a long |
| a $600,000 home, in a neighborhood that the | | | | term financial budget on an ARM home loan program. |
| average value is 400,000, guess what, you're paying | | | | If you are on a tight budget your best chance is to |
| too much. Now if you are the seller you are skipping | | | | explore a fixed mortgage rate. Most borrowers feel |
| to the bank with your extra money, but if you are a | | | | comfortable with a simply easy predictable monthly |
| buyer you will soon find that you paid too much for | | | | mortgage payment. |
| your home, once home values level off. | | | | There are several only resources that can help you |
| A huge problem that most borrowers have with an | | | | find a perfect low fixed mortgage rate. Do your |
| ARM is the 5 year surprise. What's the 5 year | | | | research. Make sure the company you are dealing is |
| surprise, well when you sign a traditional ARM, you | | | | with the Better Business Bureau, A rating with the |
| pay as little as possible for the first 5 years, and no | | | | BBB, and are reputable. |
| FED interest rate is calculated. Then after 5 years, | | | | Currently it is time for home owners with ARMs, and |
| the Adjustable Interest Rate program starts, and | | | | even fixed rates to start shopping for a new lower |
| now your monthly mortgage payments include the | | | | fixed mortgage rate. Overall mortgage applications |
| FED's interest rate. So you can potentially be seeing | | | | for ARMs have declined; they have reached their |
| quadruple monthly payments, and your payments can | | | | lowest point since 2003 of March. |
| continue to increase month after month if the | | | | |