Why an adjustable rate mortgage?
why would someone want to pay 800 a month for 3 years then 1200 a month after 3 years? it sounds nuts! whats the dominance of doing that?
Answers:
so they can live in a bigger house right now. Also they might not want to live here long term and will probably refinance at the end of 3 years.
When you cannot afford more then $800 in the foundation...
Hi,
There are a few reasons why you would nouns via ARM:
1. You will be moving before the fixed term expires - an ARM have a much better rate than a fixed mortgage so you will save significant money with the lower payments.
2. You may be working on your credit and quality you can improve it before the fixed residence expires - you then refinance at a better relative rate. This is viable if your initial rate is pretty bad due to your credit.
However, most culture these days do it so they can buy a house they can afford *now*, without considering the consequences down the road. With rates climbing, lots of folks with 3-5 year ARMS from 2002-2004 will be in for much better payments.
If you expect the property to substantially appreciate within the 3 years then at the end of that occupancy you can refinace (with another lender) to take advantage of your increased equity. 3 years and a 50% boost surrounded by payments sounds to me like you're dealing with an unscrupulous lender. What you should be looking at is the APR of the loan which is stated on your TIL (Truth surrounded by Lending) document. Go to an online site like bankrate.com and see how your crazy loan compares with others (comparing APRs). You'll also find out how to divide the true cost of your loan. On the surface I wouldn't touch that loan with a hundred foot pole..
If you get it re-financed before those 3 years, you dont hold to worry about paying more, your payoff will drop. If it turns out you cannot re-finance you are screwed! They are easier to qualify for!
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Answers:
so they can live in a bigger house right now. Also they might not want to live here long term and will probably refinance at the end of 3 years.
When you cannot afford more then $800 in the foundation...
Hi,
There are a few reasons why you would nouns via ARM:
1. You will be moving before the fixed term expires - an ARM have a much better rate than a fixed mortgage so you will save significant money with the lower payments.
2. You may be working on your credit and quality you can improve it before the fixed residence expires - you then refinance at a better relative rate. This is viable if your initial rate is pretty bad due to your credit.
However, most culture these days do it so they can buy a house they can afford *now*, without considering the consequences down the road. With rates climbing, lots of folks with 3-5 year ARMS from 2002-2004 will be in for much better payments.
If you expect the property to substantially appreciate within the 3 years then at the end of that occupancy you can refinace (with another lender) to take advantage of your increased equity. 3 years and a 50% boost surrounded by payments sounds to me like you're dealing with an unscrupulous lender. What you should be looking at is the APR of the loan which is stated on your TIL (Truth surrounded by Lending) document. Go to an online site like bankrate.com and see how your crazy loan compares with others (comparing APRs). You'll also find out how to divide the true cost of your loan. On the surface I wouldn't touch that loan with a hundred foot pole..
If you get it re-financed before those 3 years, you dont hold to worry about paying more, your payoff will drop. If it turns out you cannot re-finance you are screwed! They are easier to qualify for!
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