Adjustable Rate Mortgage Binghamton NY

Adjustable rate mortgages (also known as ARMs) are one of the most common types of mortgages for homeowners. Adjustable rate mortgages have an adjusting interest rate that is tied to an established index. Your monthly payments will actually vary based upon several factors that are actually beyond your control. The decision between an adjustable rate mortgage and a fixed rate mortgage is a very important one depending upon your financial circumstances. The decision, like any major life decision, requires careful thought and consideration.


1 . Local Companies

Citizens Bank - Endicott
607-754-5021
18 Washington Avenue
Endicott, NY
Four Corners Abstract
(607)772-6976
71 State Street
Binghamton, NY
Nbt Bank Offices For Customer Service And Account Information
(607)656-5201
80 South Chenango Street
Greene, NY
Commonfund Mortgage Corporation
(607)798-0900
3439 Vestal Parkway East
VESTAL, NY
American General Financial Services
(607)748-7396
1905 Vestal Parkway East
VESTAL, NY
Citizens Bank - Vestal Parkway / Wal-Mart
607-729-6946
2405 Parkway E
Vestal, NY
Citizens Bank - Endicott Drive Thru
607-754-9872
12 Madison Avenue
Endicott, NY
Sherry L. Barton Agency
(607)722-6479
286 Conklin Ave
Binghamton, NY
Nbt Bank For Customer Service And Account Information Offices
(607)642-3550
2 North Main Street
Newark Valley, NY
Cambridge Company
(607)748-3195
231 Main Street
VESTAL, NY

2 . Why Are Adjustable Rate Mortgages So Popular?

Adjustable rate mortgages have become popular because people do not stay in their houses for as long as compared to previous generations. For this reason, a lot of homeowners are looking to keep their initial monthly payments low. If the homeowner plans to stay in the house for five years or less, an adjustable rate mortgage may contain lower interest rates compared to fixed rate loans. That is one of the reasons for the increased popularity of adjustable rate mortgages. Plus, consumers like having more disposable income available, and adjustable rate mortgages can sometimes free up money each month, especially for homeowners who are having difficulty making ends meet.

If you're the type of consumer who is purchasing a home following the traditional way of having a 20% down payment, then an adjustable rate mortgage might not make sense for you. Adjustable rate mortgages are a much more popular option for consumers who are using alternative methods to purchase their homes. Young professionals just starting their careers find adjustable rate mortgages to be a good option, especially if they're carrying a lot of student loan debt.

Before applying for a mortgage, it's best to carefully evaluate your situation to determine what type of mortgage is the best option for you. Some consumers know this either intuitively, or because they have a preference. If you don't have a preference, or would like to learn more about adjustable rate mortgages, read on to determine how adjustable rate mortgages might fit into your goal of homeownership.

3 . Teaser Periods

Some adjustable rate mortgages provide the new homeowner with teaser rates. The teaser interest rates will be lower than the index rate for a specified period of time. With the low interest rate, many first time homeowners will be able to afford the payments to make homeownership possible. However, the catch to homeowners is that the teaser rate will not last forever, and this could make the risk of foreclosure higher In the future. Budget accordingly, so you can easily handle wide fluctuations in your interest rates both now and in the future.
Taking a teaser rate is not that risky if real estate prices go up during the time that you have your adjustable rate mortgage. The reasoning is that the homeowner will have the opportunity to refinance using the equity in the appreciated home value to make the mortgage payments lower. However, appreciating real estate prices in the short term are not always a certainty. Clearly, the teaser rate period of adjustable rate mortgages may subject the buyer to more risk than the traditional rate mortgages, but that's not always a bad thing.

It's always advisable to read your paperwork carefully before taking out an adjustable rate mortgage. Also, make sure you retain all copies of any paperwork you do receive for as long as you own the home, even after your mortgage is paid off.

4 . Loan Caps

To reduce some of the risk for the homeowner, most adjustable rate mortgages contain a loan cap. Loan caps are fairly complicated, and every adjustable rate mortgage contains different terms. There are three important types of loan caps: Initial Adjustment Rate Cap, Rate Adjustment Cap, and Lifetime Adjustment Cap.

Generally speaking, the initial adjustment rate cap is a fixed interest rate above the start rate of your adjustable rate mortgage. On most adjustable rate mortgages, the standard initial adjustment rate cap is 3% for the initial fixed rate term of three years. When the initial fixed rate is five years or greater, a cap of around 6% is common in most adjustable rate mortgages.

To protect homeowners from extraordinary initial adjustments, adjustable rate mortgages contain a rate adjustment cap. The rate adjustment cap is the maximum amount the interest may increase on each succeeding adjustment. Standard rate caps are 1% for the initial fixed term of three years, and 2% for initial fixed terms of 5 years or greater.

Subject to the credit scores of the borrower, adjustable rate mortgages contain a lifetime adjustment cap. This range is usually between 5% and 7% of the start rate in your adjustable rate mortgage. The better the credit scores, the lower the lifetime rate cap will be in the adjustable rate mortgage. That's why it's important to pay close attention to your spending and payment history in the period of time before you plan to apply for a mortgage. You'll definitely want your credit score to be as good as possible before applying for a mortgage, so you qualify for the best deal possible.

To avoid getting in over your head with adjustable rate mortgages, the borrower should calculate the monthly payments assuming interest rates go as high as the adjustment cap. This is the worse case scenario, and borrowers should factor this into their decision-making process.
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