Professional Real Estate Mortgage Information – What About an ARM?
Looking for some real estate mortgage information? Financing can easily be the most confusing part of shopping for a home–whether it’s your first home or your tenth home. However just a little information can help you walk into the real estate agent’s office better prepared and more at ease with the whole process. One common question many people ask the first time they see some real estate mortgage information is “what is an ARM mortgage loan“?
An Adjustable Rate Mortgage (ARM) is a mortgage loan under which the interest rate is adjusted over a given time. The amounts and times of adjustment are agreed to at the start of the loan. Most people are wary of these types of loans mainly because they do not understand how they work. In fact, without some in depth knowledge of real estate mortgage information many people think that ARMs were the reason for the subprime meltdown and the financial crisis. But with a little research it can be shown that for many people, an ARM is actually an acceptable or even a preferred method of financing.
There are a number of different types of ARMS. The best choice would usually be an ARM that adjusts in the fifth year and then each year thereafter. This can be good if this is the buyers’ first house, if they plan to stay for less than five years, and as long as they don’t base their decision solely on their ability to sell the home later. That real estate mortgage information can save them a quarter, a half, or three quarters of a point on their interest rate.
If you person search for one of the many mortgage calculators on the Internet, buyers can make it easy to determine how large a mortgage they can afford and what their monthly payments at different loan amounts will be. A good rule of thumb is that monthly mortgage payments should not exceed one-third of monthly gross income. Before you start plugging numbers into a calculator however, you should make sure you have a clear picture of your current financial situation.
There is another kind of ARM which is a ‘hybrid’. Borrowers with “hybrid” adjustable-rate mortgages are finding themselves in a tough situation right now. Many of these loans are re-setting to levels that are lower than the initial fixed rates because the yields on some common benchmarks used for resetting ARMs have dipped to their lowest levels in decades. As a result, many ARM borrowers must decide whether or not they should refinance to lock in a good rate for the long term or keep their ARM’s current rate that is even lower right now but that could spike once the economy rebounds.
As you can see, once you’ve asked “what is an ARM mortgage loan” there is a wealth of Real Estate Mortgage Information to look into. But with a little research on your own, a clear picture of your finances now and your plans for the future, and a little professional advice you’ll find yourself in a new home with no problems.