Adjustable Rate Mortgage Watervliet 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

Edward M. Sossner Esquire
(518)463-3600
350 Northern Blvd Ste 102
Albany, NY
Bryant Asset Protection Aw Schermerhorn Inc
(518)439-1141
1280 New Scotland Rd
Slingerlands, NY
Resource One Mortgage
(518)371-8480
400 Clifton Corporate Park
CLIFTON PARK, NY
M & T Bank - Banking Departments- M & T Mortgage Corporation Northway
(518)877-3500
10 Executive Park Drive
CLIFTON PARK, NY
Citifinancial
(518)357-9761
1400 Altamont Avenue
SCHENECTADY, NY
Bank of America - Bellevue
800.432.1000
2525 Broadway
Schenectady, NY
All Season Title Agency
(518)348-9900
9 Executive Park Drive
Clifton Park, NY
Superior Mortgage
(518)373-8284
634 Plank Rd
CLIFTON PARK, NY
Metroland Agency Inc
(518)377-2072
2330 Broadway
SCHENECTADY, NY
eMortgage- LLC
(518)786-0900
6 Century Hill Dr
LATHAM, 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.
Related Articles
- Options for Home Refinancing Watervliet NY
There are many options for home refinancing; the one you choose will most likely depend on your particular circumstances as well as the reason for the refinance. In the following paragraphs, we'll look at reasons why people refinance their home mortgages as well as a few options for home refinancing.
- How to Understand a N.I.N.J.A. Mortgage Watervliet NY
- How to Compare Mortgage Programs Watervliet NY
- Advantages and Disadvantages of Refinancing Watervliet NY
- How to Avoid Foreclosure by Knowing Your Mortgage Type Watervliet NY
- How to Create a Mortgage Calculator With Microsoft Excel Watervliet NY
- How to Talk to Mortgage Lenders Watervliet NY
- Flexible Mortgage For Self Employed Watervliet NY
- How to Lock in a Mortgage Rate Watervliet NY