An Adjustable-Rate Mortgage (ARM) is a type of loan whose prevailing interest rate is tied to an economic index (like one-year Treasury Bills), which fluctuates with the market. The three most popular types of ARMs are one-year ARMs, which adjust every year, three-year ARMs, which adjust every three years, and five-year ARMs, which adjust every five years. When the loan adjusts, the lender tacks a margin onto the economic index rate to come up with your loan’s new rate. ARMs are considered riskier than fixed-rate mortgages, but their starting interest rates are generally lower than a longer-term rate. Learn more about ARMs and other mortgage options here.
100 Years Of Housing
By the 1950s, homes were being built with bathrooms and kitchens, closets and a huge unfinished second floor for "someday" expansion. By the year 2000, newly-constructed homes had three or four bedrooms, two and a half baths, built-in washing machines and dryers, master suites, attached two or three car garages, built-in fireplaces, and central air. But perhaps the biggest changes in housing in the last 100 years center around the rate of homeownership and the actual price of homes.
Mortgage Loans: Getting Prequalified To Buy A Home
Before you can apply for a mortgage loan and buy a home, you have to get prequalified. Getting prequalified for a mortgage means having a lender analyze your assets and income stream, so he can decide whether to approve you to apply for a mortgage. Having all your documents ready ahead of time will speed the prequalification process up so you can apply for a mortgage loan and buy a home.
When Should You Refinance
As the Federal Funds Rate is lowered, long-term interest rates might come down significantly. With these lower rates, you might be thinking now is the time to refinance. Who should refinance? If you have a high-interestrate loan, you ahve good credit, you have equity, or you need cash, now might be a good time to refinance. You can also talk to your mortgage lender about streamlining your loan.
Are You A Homeowner Or Home Seller?
By definition, a homeowner is someone who owns a piece of property. But beyond being financially invested in that property, homeowners are often emotionally invested in their property. A home seller is someone who has managed to disconnect the emotional ties binding him or her to the property, even though he or she may be living there.
Mortgage Loan Rates Depend On Economy
Some mortgage are tied to indexes such as the London InterBank Offered Rate (LIBOR). Others are tied to treasury bonds. If you have an adjustable rate mortgage its rate will vary depending on what happens with the index it's tied to. When you're applying for a mortgage the rate you get depends on interest rates currently available. Interest rates for new mortgage loans change over time.
What Kind Of Loans Should You Get When Interest Rates Are Rising (Part II of II)
Two things come into play when deciding between a fixed rate mortgage or an adjustable rate mortgage -- how long you plan to stay in your home and how concerned you are about rising interest rates. The good news is that you have plenty of loan choices today when it comes to financing your home. While you can get a 30-year fixed-rate loan, or a 1-year ARM, there are plenty of hybrid loans that combine the best features of each.
Financing Options Include ARM Mortgage Loan
Choosing the right type of financing depends on factors such as interest rates and how long you intend to stay in your home. If you're financing or refinancing and interest rates are high, it may make sense to get an adjustable rate mortgage (ARM). Learn also about financing with a fixed rate loan.
Know How Long You Plan To Stay Before You Choose Your Loan
A long-term, fixed-rate mortgage loan might be a good idea if you plan to stay in your home for an extended period of time, say, more than 7 to 10 years. But if you're only going to stay in your home for 5 or 7 years, or even 10 years, it doesn't necessarily make sense to lock in on a long-term mortgage loan, experts say. There are other mortgage loan options out there that will save you money and for the short term are every bit as stable as a fixed-rate.
Homeowners: Reasons To Refinance Your Home
Homeowners have several reasons to refinance their homes. The best time for homeowners to refinance their homes is when they can save money. Experts say homeowners often rush to refinance their homes when interest rates are down, but that may not be the best or most cost-effective time for them.
How To Select The Right Mortgage
No matter what lenders try to do to simplify the process, selecting the right mortgage continues to be a problem for most home buyers. But knowing how long you plan to stay in your home is key to unraveling the mystery behind the loan process. Make sure you ask the lender to thoroughly describe the ins and outs of each loan types you're offered. It's up to you to research what closing costs and fees are being charged in your area. Contact several of the largest lenders and see what they're offering.