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The Return of the Adjustable Rate Mortages
I am seeing an uptick in the use of Adjustable Rate and Hybrid Mortages and for good reason.
Too many people used Adjustable Rate Mortgages in the past to leverage their purchasing power to buy more home than they could afford hoping their financial and property values would improve faster than the potential of the raising rate of their mortgage. Unfortunately, many of them since learned that hope is not an effective strategy.
But, for the right consumer Adjustable Rate Mortgages can still make perfect sense. Americans are mobile and move to follow their job opportunities, their children, their parents or their dreams. If you know that with your lifestyle, you are apt to move in 5, 7, 10 or 15 years, there is an Adjustable Rate Mortgage product that might fit perfectly for you at a much lower rate than a 30 year fixed rate mortgage, so why pay the higher rate for nothing?
For example, assume you are going to buy a home while going to college. Instead of planning on 4 years, factor in a one year buffer in case you end up on the 5 year plan. If you are going to have a $250,00 mortgage, check out the difference:
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