A fixed rate alternative

By
Real Estate Broker/Owner BRE# 01353757
http://actvra.in/wRG

Consumers and specially people that are trying to buy, rent, or refinance their homes; save their homes from foreclosure; or sell their properties might hear some different stories and feel differently about the news and how they might be affected by it.  Here is an interesting article worth a few minutes of your time:

 

 

 

The New York Times

A fixed rate alternative
With interest rates at historically low levels, many borrowers are finding value with a reliable fixed-rate mortgage.  However, borrowers who think they could be relocating in the near future, or need to shore up savings, might want to consider what some regard as the next best thing: An adjustable-rate mortgage that offers several years at a fixed interest rate.

Making sense of the story

 

  • Hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s.  They fell out of favor – along with the riskier ARMs that offered extremely low teaser rates and interest-only components – after the subprime mortgage market collapsed.

 

  • Some adjustable-rate mortgages have an interest rate that changed every year, but a hybrid – also known as a delayed first-adjustment ARM – has a fixed interest rate for a period of time.  Most loan officers refer to a hybrid by the period during which the rate is fixed.  A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 loan adjusts after seven years.

 

  • ARMs account for only a small segment of the overall mortgage nowadays, financing just slightly more than 10 percent of home purchases.  However, market share for hybrid loans is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac.  The 5/1 hybrid was the most popular adjustable-rate loan product in the market, according to the survey.  The least popular was a 3/3 ARM, which adjusts once every three years.

 

  • A common reason for choosing a hybrid ARM is projected length of homeownership.  It’s a nice option for buyers who don’t expect to stay in their home for longer than three to five years.

 

  • Rates on hybrid ARMs are also attractive.  As of last week, the average rate on a 5/1 loan was 2.81 percent, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.

 

  • Borrowers should be aware though that with rates starting at rock-bottom levels, there’s generally only one direction for them to go.  And even though there are caps on the rate change amount, the jump could be as much as six percentage points...

 

 

 

Read the full story.

 

                       

Posted by

Call Frank,  Buy or Sell with CONFIDENCE & KNOWLEDGE

Pic&Phone

Broker, Agent, or/and MLS provider does not guarantee the accuracy of: 1- the reports, charts, articles, and also the information from links to other websites. 2- Square footage, lot size or other information regarding the conditions or features of properties provided by the seller or obtained from Public Records or other sources as presented in this website. Many articles may be time and date sensitive so please always look at the date posted. Consult your tax advisor, financial planner, attorney, or/and appropriate professionals concerning your personal specifics. Interested parties are advised to independently verify the accuracy.                                                            

                                                          Frank Moham  DRE LIC. #01353757

 

 

 

Contact Frank By:

email   facebook   G+   blogger twitter  WhoAmI  Subscribe RSS  Subscribe ar 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Tags:
a fixed rate alternative

Post a Comment
Spam prevention
Spam prevention
Post a Comment
Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
382,067

Frank Farahbakhsh Moham

ABR®, ePRO®, GREEN®, TRC®, VRM®, SFR®, REALTOR®
How much is your home worth? Other Questions?
*
*
*
*
Spam prevention

Additional Information