There have been mixed reviews about Adjustable Rate Mortgages throughout the Real Estate Industry, our beloved Media, & the General Public as a whole.  Personally, I stand by the credence that they are a very good product & tool for some people.  Just because Neighbor Bob, who is being transferred to Western Pennsylvania  to head up the Academic Advisory Role at Penn State has an adjustable rate, doesn't mean that it's right for you and your particular financial situation.  In celebration of keeping it simple, I won't go into a breakdown in which cases that an Adjustable Rate may make more sense than a Fixed Rate, or vice-versa.  That's a unique & individualized case by case call, dependent upon a variety of factors including your goals, current financial make-up, possible future financial make-up, etc, etc.  I'd advise you consult a Mortgage Professional to analyze your situation to help make the best decision for you.  I'd also highly recommend you don't let Neighbor Bob advise you on your Mortgage Needs, he's probably better suited to help your children in the pursuit of a higher education at a College Institution.

What I really want to concentrate on is 2/28 ARM's that were entered into by a lot of individuals with less than stellar credit and highlight one particular case study whose loan closed earlier today.  These adjustable rate loans were typically fixed for two years, at a lower rate than one may qualify for otherwise, and then became adjustable after the two year time frame was up.  The philosophy, if used and recommended correctly, would give you a lower payment and allow you to clean up your credit to 'White House Dining Stature'.....all along making sure all your mortgages payments were being made on time.  Some followed the plan, some didn't.  Some were advised well, some not so much.  The important thing to me was that when you entered into that loan, you did so in a good equity position.  After-all, if you owe a high percentage or more than your home is worth after your rate adjusts, I don't care how good your credit is....you are going to be in a proverbial pickle.

Earlier this morning, a former client of First Choice Equity Group Inc.,refinanced into a conforming interest rate that is in tune with the best rates the market has to offer.  Just two short years back, his financial life was a tad off track and he needed to refinance to consolidate debt and get back on track.  To try to lessen the impact of the risk factors he fit under at the time by putting him in a relatively high fixed rate, we put him into a 2/28 loan to get him a lower rate for those initial two years.  For his situation, the game-plan was pretty simple.  Since we consolidated all is bad debt and he was still in a good equity position, we'd use those two years to make sure he kept making his mortgage payments on time, gradually see an increase in his credit scores and not accumulate any more debt....let alone the bad kind.

I got an email from him yesterday asking me what he should bring to closing, besides a 'smile'.  I told him, "Just your driver's license, we'll supply the coffee." (1)

Today marked a day and yet another example of having a plan, following the plan, & it working out in the end.  The client in this case put himself in a very good position with the help of proper guidance and now qualified for the best rates on the market.   Not only did he end up saving over $300.00 a month, but now his credit is back in good standing...which will save him mountains of money shall he need to utilize it down the road.  There's a lot of talk about a lot of stuff out there in regards to the Housing Market, Mortgage Industry, & overall Economic Outlook of our country.  Yet, in my opinion, proper guidance & education & follow through are the necessities to put your own situation in a better one no matter what's going on in this World.  I believe that is slowly becoming an Universal Truth.

(1)  Of note, the author doesn't condone the use of such drugs as coffee, the borrower was a 'user' before we got our hands on him:-)