Refinance > Adjustable vs Fixed Rate Mortgages

Adjustable vs Fixed Rate Mortgages

by: Max Hunter

Mortgage rates can either be fixed for the duration of your loan or can be adjustable. An adjustable rate mortgage is a loan that is set up with an interest rate that changes based on pre-determined criteria, primarily tied to the federal interest rate. If the interest rates are up, then your interest rate on your loan will be higher, if the interest rates are low than the interest rate on your loan will go down.

Adjustable rate mortgages (ARM) are generally fixed interest rates for a period of time and then become adjustable. Generally speaking the introductory interest rate for an ARM loan will be lower than a fixed rate mortgage. This is done in order to lower initial payments and allow people to take out larger mortgages, or give them smaller payments for the introductory period. This is attractive to people who may know that their income will be increasing over that period of time.

Whether or not to choose an ARM or a fixed rate mortgage has been debated for as long as there have been ARMs. Though people feel strongly in both camps, simple mathematics can assist you in determining which mortgage is best for you and your personality. Your personality? Yes. Some people are not comfortable with any uncertainty in their lives. The idea of having an uncertain mortgage payment in the future may cause them more stress than the money they are saving is worth. Therefore, factor your own comfort level into the equation.

Generally speaking, ARMs are 2, 3 or 5 years, though they can be longer or shorter. At the end of that period your interest rate will become variable unless you sell your home or refinance. If you think that the likelihood of your selling or refinancing within the period of the ARM is strong, than the lower interest rates of the ARM loan will be of great benefit to you. If you think it is unlikely that you will sell or refinance within that period, then you may not benefit from an ARM.

Bob and Robyn are a young married couple just starting out. Bob is in advertising sales and Robyn is a teacher. Bob is fairly confident that his income will continue to increase over the next several years as he works his way up to becoming an account executive. Robyn's income is more predictable and is on an upward trend. Being a young couple they do not have the finances for large mortgage payments.

Bob and Robyn are presented with two mortgage proposals for their $150,000 mortgage. Proposal one is a 30-year fixed rate mortgage at 6% and the other is a 5-year ARM at an introductory rate of 5.25%. The fixed rate mortgage payments would be $899.33 per month, not including taxes. The ARM would have a 5-year period where payments would be $828.31 per month, not including taxes. Bob knows that even if he can afford the extra $70.00 per month for the fixed rate mortgage, that $70 per month may be better spent knocking down principle during the ARM period. He is further confident that as his salary increases, he is likely to upgrade his home within five years or refinance to make home improvements. Bob and Robyn took the ARM loan.

John and Catrina are a married couple with three grown children. John has been employed at the same company for 18 years and Catrina has been with her company for 12 years. They have consistent and stable income. Neither John nor Catrina expect any substantial increases in their salaries. After their last child moved out of the home they decided to downsize and buy a smaller home. They have a substantial down payment and will only be taking a mortgage of $100,000 on their new home. John and Catrina are presented with the same loan options as Bob and Robyn were. John and Catrina, however, know that it is unlikely they will sell or refinance in the next five years. They are comfortable with the payment schedule and, therefore, prefer the certainty of the fixed rate mortgage.

There are countless websites that offer mortgage calculators to determine your mortgage payment. For your convenience we offer one on our site (if you are not going to have one on your site, we can remove this, though I think it'd be good to have one on your site). You can review the different payment schedules based on the interest rates quoted for the fixed-rate and the ARM. Once you know the different payment amounts you will be able to determine which loan makes the most sense for you and your unique circumstances.

Your mortgage professional should also be able to assist you in reviewing the options and making the best decision for you. The more open and honest you are with your mortgage professional the more helpful they will be. It is only if they are armed with full and honest information that they will be able to make recommendations to you.

About The Author

Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any other type of credit issue please visit us at http://www.creditcardunlimited.com.

Refinancing to Lower Monthly Loan Payments

Refinancing to Lower Monthly Loan Payments

by: John Mussi

It can be frustrating to go through the loan process only to have interest rates or payment terms to change drastically within a year of you signing the loan papers.

Of course, depending upon the type of loan that you applied for and the loan terms that you agreed to there might not be many options available to you other than simply paying off the loan as quickly as you can? in most cases, however, you'll likely be able to refinance the loan in order to lock in the new lower interest rate or modified repayment terms.

Here is some basic information on what refinancing is and how it works, as well as whether or not the time is right for you to refinance your loan.

What Refinancing Is

Basically, refinancing is the act of applying for a new loan in order to cover an older loan. Generally it is done in order to get a lower interest rate or to alter the overall payment...

Refinancing to Lower Monthly Loan Payments

Refinance > Refinancing to Lower Monthly Loan Payments

Deciding Upon a Refinance Lender

Deciding Upon a Refinance Lender

by: John Mussi

Finding a good lender to refinance your mortgage can be almost as important a decision as the actual mortgage you choose. In order to make a wise selection of a refinancing lender you should make sure that you do the following four things.

Know the objective of your mortgage refinance

Do you want to lower your current interest rate? Refinancing your mortgage can be profitable if your current mortgage is 2% higher than the prevailing rates. You can find out the prevailing rates by checking with your current lender or any bank. Newspapers will also print the daily rates.

Moving from an adjustable rate mortgage to a fixed rate mortgage can save you money if you time it well. When mortgage rates start creeping up, consider looking for a refinance lender.

The mortgage refinance lender you pick will want to know your reason for refinancing to aid in the process of finding the best...

Deciding Upon a Refinance Lender

Refinance > Deciding Upon a Refinance Lender

Refinancing to Consolidate Debts

Refinancing to Consolidate Debts

by: John Mussi

Sometimes it can seem as though everything that can go wrong with life is going wrong? debts keep piling up, old loan payments seem to be more than you can handle, and you're just wishing that there was some way that you could take care of your problems without having to try to live beyond your means.

Luckily, there may be a way that you can do just that? get rid of some or all of the debts that you've accumulated, get a new interest rate on your loan, and reduce those piles of bills that you have laying around into a single monthly payment that's much more manageable. By consolidating some or all of your debts as part of a loan refinance, you can lock in a better interest rate while borrowing enough money to get rid of some of the other debts hanging over your head.

The information provided below should provide for you more information on refinancing and debt consolidation so that you can...

Refinancing to Consolidate Debts

Refinance > Refinancing to Consolidate Debts

Should You Consider Home Refinance, or Not?

by: Jay Moncliff

Home refinance seems to be the craze these days with interest rates at all time lows. However, you need to do some home refinance research before you will know if it is for you or not. In general, if you bought a home when interest rates were significantly higher, have great credit, little debt, and always pay your bills on time then you should probably at least consider home refinance. Although, if you meet any of the following criteria then you definitely need to think twice before you decide on a home refinance.

Home Refinance Tip #1 Second Mortgages

If you have a second mortgage and decide on a home refinance then you will likely find yourself paying more than with your original home loan. If you have taken out a second mortgage on your home to help pay other bills then getting a lender to consider a home refinance for you is going to be difficult.

Home Refinance Tip...

Should You Consider Home Refinance, or Not?

Refinance > Should You Consider Home Refinance, or Not?

Helpful Tips for Erasing Your Bad Credit

Helpful Tips for Erasing Your Bad Credit

by: Talbert Williams

Bad credit can have a harmful effect on a number of things. If

you have a bad credit, then you may not be able to get a loan or

a credit card on the terms that are favorable to you. Moreover,

it can even prevent you from getting some jobs. Thus, it is very

important to erase bad credit.

To erase bad credit, the most important thing that you need to do

is to repay your old debts. By repaying these debts, no more

negative reports would be filed in your credit history. Another

thing to do in order to erase bad credit is to add some positive

reports to your credit history.

There are a number of ways of doing this, which include opening a

new savings account, applying for a credit card and keeping the

balance low, or refinancing with a home equity loan in order to

repay all the old debts. These are the first steps that you need

to take...

Helpful Tips for Erasing Your Bad Credit

Refinance > Helpful Tips for Erasing Your Bad Credit

Blogging: You Gotta Do If For Your Business

by: Richard Rigor

In the 'good old days' - about three years ago - you used to keep in-touch with your customers using phone calls, email messages and face to face meetings. Nowadays the world has changed. People expect even more frequent updates, yet it's nearly impossible to meet with every business contact on a regular basis.

Thankfully, blogging has come to the rescue. Setting up a blog on your web site -...

Adjustable vs Fixed Rate Mortgages Blogging: You Gotta Do If For Your Business Refinance real estate

Refinance > Blogging: You Gotta Do If For Your Business

dvd Adjustable vs Fixed Rate Mortgages

projection tv Adjustable vs Fixed Rate Mortgages Refinance

A Golf Fitness Coach Equals Great Golf

by: Mike Pedersen

Golf fitness coach. Have you ever considered one?and if so, what exactly were you looking for? There are many ?general fitness? trainers trying to get a piece of the golf fitness and training market that seems to be rapidly gaining exposure both on the television and in print thanks to Tiger, Vijay and Annika.

But the first thing you need to consider when looking into hiring a golf fitness coach...

fitness A Golf Fitness Coach Equals Great Golf

Refinance > A Golf Fitness Coach Equals Great Golf