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Beware of ARM Mortgages |
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No longer are the days of simply the 30 year fixed rate mortgage. Now there are various types of mortgages available, but the most popular is the ARM Adjustable Rate Mortgage. This type of mortgage allows you not only to qualify for a mortgage but pay low mortgage costs, thus allowing consumers who would not normally qualify for a fixed rate mortgage. The way it works is you get a really low interest rate for a certain amount of time, say 5.5% for the first 3 years, making your mortgage payment minimal. After the 3 years is up then your mortgage adjusts to whatever the current market rate is. In one month your mortgage can go from $1400 to $1800. Once your rate adjusts you then have to refinance your mortgage for a fixed rate or you continue making the payments according to the market. However your rate will adjust every year, not every month. Even though you still dont want the worry of every year your rate going up. For those consumers who are in a financial situation and can ride out the up's and down's of an ARM great, but for those consumers who live on a moderate income that doesn't go up every year it could be a problem. The true sign of a disaster to come is when your mortgage goes up every year and your income isn't. If you do decide to go with the ARM, make sure your credit is in good shape so that you can refinance when you need to with out any hassles..Good Luck! |
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