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Part V: Learn About your Home Mortgage Options
from: Mark Mathis
Here are some things to consider with an ARM or a Hybrid ARM:
- Is my income likely to increase enough to cover higher mortgage payments if interest rates go up?
- How long do I plan to own this home? (If you plan to sell soon, rising interest rates may not present the risk they do if you plan to own the house for a long time.)
- Can my payments increase even if interest rates generally do not increase?
- What index will be used to adjust the mortgage rate? Ask the lender for a table showing movements in the index over the previous 10 years to see how your mortgage payments would have changed.
- How often will the interest rate be adjusted? Every year? Three years? Five years? The longer the adjustment period, the better you will be able to plan your future loan cost.
- What is the initial mortgage interest rate? Does it include a special discount or “teaser?” If so, you could face a large increase in your monthly payments when the interest rate is adjusted for the first time.
- What is the margin on the interest rate? The margin is the amount that the lender adds to the index rate to calculate your mortgage rate. For instance, if the index rate is 7 percent and the margin is 2 percent, your overall interest rate would be 9 percent.
- What limits or caps have been placed on the adjustments? One of the most important items to discuss with your lender is the maximum amount that your mortgage rate can increase in any single adjustment period and over the life of the loan. Find out the "worst case" situation in the event of a sharp increase in your index rate.
- Is the loan convertible? If so, is there a cost to convert? Convertibility allows you to change your ARM to a fixed-rate loan at some designated time in the future.
- Is there a prepayment penalty? If you refinance your loan with a new loan, you may be assessed a fee.
Finding the correct mortgage for your family's particular needs is a very important step in the home building process. Be sure to thoroughly research all available options, and speak to several home finance professionals prior to making a decision. Selecting the wrong initial financing option can turn out to be a costly one.
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About the author:
Mark Mathis is a building designer and publisher of several stock house plan websites and informational resources including http://www.HousePlanCentral.com,
http://www.HousePlanGallery.com, and http://www.moneytalks-bswalks.com. Be sure to visit each site and subscribe to our eNewsletters to receive special offers, promotions, and subscriber-only features.
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Uk Home Mortgage Refinance Rates News
Conti teams up with mform.co.uk for overseas mortgages. - Mortgage Introducer
Conti teams up with mform.co.uk for overseas mortgages. Mortgage Introducer, UK - The partnership will enable even more people to find the right mortgages to buy or refinance their property abroad, and we’re delighted to be mform.co.uk’s ... |
UK housing equity withdrawal turns negative in Q2 - guardian.co.uk
UK housing equity withdrawal turns negative in Q2 guardian.co.uk, UK - Rising house prices in recent years encouraged Britons to refinance home loans to free up cash for other purposes. The drying up of this source of funding ... |
Global markets brought down by risky innovations - Taipei Times
Global markets brought down by risky innovations Taipei Times, Taiwan - And most mortgage holders probably expected to refinance their mortgages before their rising interest-rate trebled or quadrupled monthly repayments. ... |
HBOS - Lloyds TSB takeover: experts tell customers not to panic - Telegraph.co.uk
HBOS - Lloyds TSB takeover: experts tell customers not to panic Telegraph.co.uk, United Kingdom - This business model allows banks to offer very competitive rates to home owners. HBOS, even though it was very profitable, did not have enough cash on its ... |
Money-Market Rates Jump as Bank Rescues Stoke Lending Concern - Bloomberg
Money-Market Rates Jump as Bank Rescues Stoke Lending Concern Bloomberg - ``The special term-refinancing operation will be renewed at least until beyond the end of the year,'' the central bank said in a statement. ... |
US mortgage takeover promises no quick housing fix - guardian.co.uk
 BBC News | US mortgage takeover promises no quick housing fix guardian.co.uk, UK - By restoring confidence it should also bring down mortgage rates so previous home buyers can refinance into cheaper loans and new ones can enter the market. ... Video: The Mortgage Crisis: Responsible Borrowers  Comment by Mark Goldman Real Estate Lecturer, San Diego State University |
Why the US should reject the bail-out - MoneyWeek (subscription)
Why the US should reject the bail-out MoneyWeek (subscription), UK - ... to refinance the US investment banks and their foreign landfill sites, let alone home-buyers, mortgage lenders and house builders. Yet five UK banks ... |
Money-Market Rate Jumps the Most in 9 Years as Banks Hoard Cash - Bloomberg
Money-Market Rate Jumps the Most in 9 Years as Banks Hoard Cash Bloomberg - HBOS Plc, the UK's biggest mortgage lender, slid as much as 52 percent today on speculation it may not have access to funding. The shares rebounded, surging ... |
Remortaging an overseas home to buy in UK is ‘madness’ - Homes Overseas
Remortaging an overseas home to buy in UK is ‘madness’ Homes Overseas, UK - He added: “in a perfect world rent paid in Euros from the holiday home would cover the mortgage and the exchange rate would deliver a even bigger deposit. ... |
Dollar Falls as Credit Crisis Deepens - Forex Hound
Dollar Falls as Credit Crisis Deepens Forex Hound, NY - Mortgage refinance applications spiked 88.1% last week, to the highest level since May, with the average refi loan size surging 12.6%, the Mortgage Bankers ... |