Trade in Your ARM
Have an adjustable rate mortgage (ARM) loan? Refinance now to a fixed rate mortgage before your payments go any higher. By refinancing your mortgage to a fixed interest rate mortgage loan you will lock in your interest rate for the duration of the mortgage loan.
Adjustable rate mortgage loans are losing their attraction as mortgage interest rates rise. Some one year ARM loans still offer low rates today; however, there are no indications the interest rate hikes will stop anytime soon. These increases in interest rates will cause your payments to rise sharply. Also, after the introductory period of the mortgage the adjustable interest rate will automatically jump to the one year Treasury interest rate plus as much as 2.47 percent. On top of that your lender can add 2 more points every year. With this in mind you could easily e paying 7.5 percent next year and over 8 percent the year after that.
The only time adjustable rate mortgages make sense is if you know that you’ll be moving anytime during the next five years; otherwise, avoid adjustable rate mortgage loans.
Adjustable rate mortgage loans are losing their attraction as mortgage interest rates rise. Some one year ARM loans still offer low rates today; however, there are no indications the interest rate hikes will stop anytime soon. These increases in interest rates will cause your payments to rise sharply. Also, after the introductory period of the mortgage the adjustable interest rate will automatically jump to the one year Treasury interest rate plus as much as 2.47 percent. On top of that your lender can add 2 more points every year. With this in mind you could easily e paying 7.5 percent next year and over 8 percent the year after that.
The only time adjustable rate mortgages make sense is if you know that you’ll be moving anytime during the next five years; otherwise, avoid adjustable rate mortgage loans.
posted by Zoie | 1:08 PM
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