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Adjustable Rate Home Mortgages Making A Comeback
Bill Kamboukos of Strategic Mortgage wrote an article on adustable rate home mortgages making a comeback. In light of all the talk about the feds restricting mortgages to 20% down, we thought this article was one of interest to all.
Believe it or not, adjustable rate mortgages are making a comeback During the housing boom nearly seventy percent of all mortgages issued were ARMs, but then disappeared during the downturn, totaling just three percent of the total market in 2009. However, ARMs now make up 5% of all mortgages issued, and Freddie Mac predicts that will jump to 10% by December 2011. Behind the comeback in ARM mortgages, is that right now these loans are a great bargain for the right person.
5 year fixed adjustable rate mortgages currently have interest rates near 3.5%, compared to almost 5% for 30 year fixed mortgages. Of course with ARMs as opposed to fixed rate loans, interest rates change over time.
For example, the 5/1 ARM, the most common adjustable rate loan, that 3.5% introductory rate will last for the first five years. After that, the rate will adjust annually. Where as a thirty year fixed loan will stay that way for the life of ... more

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