Adjustable rate mortgages (ARMs) are loans that begin with a low interest rate and adjust eventually to a much higher rate. This higher rate normally corresponds to a benchmark interest rate, such as the yield on the 10-year U.S. Treasury Note, and may change over time as the benchmark fluctuates.
ARMs often are offered to novice borrowers who may not understand the implications of adjustable rates. ARM borrowers tend to have poor credit, and thus the initial low interest rates (and correspondingly low monthly payments) make the loan seem affordable. When the rates adjust and monthly payments rise, however, borrowers suddenly are unable to make their payments.
Consequently, it usually is wise to refinance your ARM with a fixed-rate mortgage before the rate adjusts. This is particularly true if your credit has improved, or if market interest rates are set to rise. As of July 2006, market interest rates have been increasing for more than three years. While there is reason to believe that rates might drop within the next six months or so, if you are able to find a fixed-rate mortgage with a rate comparable to your ARM’s introductory rate, you definitely should consider refinancing.
- |
-
- |
- |
Credit Card Laws: No Debt Reduction Help
Recent legislation designed to provide clear communications between credit card companies and their customers does not assist consumers with paying off debt faster. If you're slogging through a swamp of credit card debt, here are some debt reduction solutions.
How to Solve Tax Debt Created by a Spouse or Ex-SpouseDid your spouse or ex-spouse leave you with a tax debt problem, as well as a broken heart? Regarding the tax debt problem, you may have options. Here are two.
Debt Management: Seven StepsA cash based budget and debt management plan can help you retire your credit card debt. Here are some tips for getting started. Debt help is available if you're facing insurmountable financial problems.
Credit Counseling and Debt Settlement: Know the DifferenceIf you're struggling with too much debt, credit counseling or a debt settlement service can help. Both options help in reducing debt using different methods. Requirements and credit consequences can vary according to individual programs.
Five Personal Problems You Should Mention In an IRS AuditWhen working with the IRS to solve a tax debt problem, it's no use claiming "the dog ate my homework." However, certain personal situations do deserve mention.
Guide to No Cosigner Student Loans
Are you a would-be student who would like to attend college, graduate school, or professional school, but are hesitant because you…
The advantages of using your local credit union to refinance your mortgageLocal credit unions increasingly are popular alternatives to traditional banks. While banks are privately owned,…
Debt Consolidation for Senior CitizensFew people have more financial choices, yet more opportunities to be overwhelmed by those choices, than senior citizens. Seniors…
What is the Best Loan and Debt Repayment Program?Incurring debt sometimes is necessary in order to meet one’s financial and personal goals, or to make payments for necessary…
Bad Credit Student Loans for High Risk StudentsCollege costs nowadays are through the roof and are only expected to rise in the future. Most students and/or their parents…
