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Informative Articles

Avoiding PMI
PMI - a recurring, monthly, unwelcome guest. It sounds similar to and is about as welcomed as a similar acronym. PMI is private mortgage insurance. This insurance policy is paid for by the homebuyer when the amount of their primary mortgage is...

Get a better mortgage refinance deal than your local bank offers
Gone are the days when money could be fetched either by mere mortgaging or financing something. Now it is time to get money via an amalgam of the two i.e. Mortgage Refinance. Mortgage refinance is a smart idea to have a good credit sum and repay...

Questions To Ask About Refinancing
It's important to think of all the questions to ask about refinancing before actually signing anything as refinancing is not for everyone. People refinance for many reasons - to lower monthly payments, to pay off a loan, build equity...

Refinancing Your Home - IS the Time Right?
Refinancing your home is a major decision not to be taken lightly, even in this era of low interest rates and easy money. While every mortgage company in town is touting the strategy of getting a new loan before rates rise again, there are several...

Right starting of a home business (Part II)
START A BUSINESS WITH START UP MONEY Most home businesses do not involve extensive startup costs, so you most probably will be able to "bootstrap" your fledgling operation using your own money, but if you can't, use... Credit cards. Be...

 
ARM Loans

ARM stands for Adjustable Rate Mortgage. There are various types of ARM products with the most common being the 1/1, 3/3, 5/1 and 7/1 ARM. The first number tells you the length of time the Rate will be locked. The second number indicates the length of the adjustment period after the initial rate lock period. For example, the 7/1 ARM has the rate locked for seven years or 84 months. Then it will adjust annually thereafter. ARMs can be amortized over 15, 20 or 30 year time periods which can allow for lower monthly payments. One fear that most consumers have is that the rate can adjust. However, most ARMs come with caps which are usually 2% per year or 6% over the life of the loan. This means, during the first adjustment period, the rate can't go up or down more than 2%. Let's look at the 7/1 ARM again. If the initial rate is 5.25%, then the rate can't go higher then 7.25% at the end of the initial rate lock period of seven years or 84 months.

ARM rates tend to be initially lower than fixed rate mortgages. If you plan on only being in your home for 7 to 10 years, lock in a 7/1 ARM and take advantage of the lower rate versus a 30 year fixed rate mortgage. Everyone's situation is different, but the average life of a mortgage loan ranges from 7 to 12 years because people often move or refinance their loan. So, why not enjoy the lower rate?

For more information on ARM products, contact Mary Lou Call at First Federal of Lakewood. She can be reached at 216-529-5637. Or for more real estate information and articles visit http://www.youshouldown.com

About the author:

Cecilia Sherrard is a full time dedicated Realtor in Northeast Ohio. With years of experience and knowledge, she has maintained a multi-million dollar producer status. Servicing areas such as: Westlake, Lakewood, North Olmsted, Rocky River, Cleveland, Brook Park, Parma, etc. Visit her website at http://www.youshouldown.com