Getting a mortgage can be confusing. There are a LOT of different types of loans out there. An Adjustable Rate Mortgage can seem tempting when rates are high, or going up, as they are now. An ARM has an interest rate that changes with the market. It is like gambling. When the economy is in great shape, your ARM has lower rates. There are hidden dangers to an ARM, though, that make them tougher to recommend.
When interest rates rise, your rates and payments can go up in a hurry. Depending on the type of ARM that you sign up for, a 3% mortgage rate can turn into an 8% with a sharp rate increase over 3 years. Your first adjustment can also include a massive spike to your rate. Many ARM agreements don’t cap the first adjustment. This means that even if you have an annual cap of 2% and a lifetime of 6%, the first year could see a jump from 3% to 9% after the closing if the rates skyrocket.
You need to know the facts before deciding to make one of the biggest investments of your life. With a fixed-rate mortgage, you know exactly what your payment will be every month. With current rates low and home prices holding steady, any refinance is a good choice. You have to take advantage of rates now to save money. Knowing what your payment will be every month will help you budget. You’ll never have to worry about your mortgage rate skyrocketing with a fixed rate mortgage. With an ARM, you are at the mercy of the market.
The real debate is stability vs. possibility. If you want to gamble on paying lower interest rates, an ARM could work for you. If you want a stable payment that you never have to worry about changing, a fixed-rate mortgage is the right call.
To take advantage of these lower rates today, call The Home Loan Expert, Ryan Kelley in Chicago at (773) 770-4727 or apply online at www.thehomeloanexpert.com now. Nobody makes it easier to refinance to a fixed-rate mortgage in Chicagoland than The Home Loan Expert, Ryan Kelley.