Achtung Stay Away From
Adjustable Rate Mortgages |
By Guru Bhakt |
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If you are thinking of mortgage refinancing then there is one thing
you might want to know and that is - you should stay away from ARMs
( adjustable rate mortgages ) ...
And if you are wondering
why anybody would want to do that, especially since ARMs promise
such low interest rates, well here's why ...
Adjustable rate
mortgages are a great idea when the interest rates are all set to go
down for the next several years ...
And interest rates go
down only when the Government wants to increase consumer spending.
Interest rates go down when the Government is looking at ways to
stimulate the economy, boost consumer spending ...
But you
might want to ponder whether this is the case now ...
Consumer spending is extremely good and real estate prices are
increasing at record growth rates that may not have been seen
before. In fact, in some areas the rates are so high that some
experts are actually wondering if anyone but the really rich can
actually own property there.
And if the real estate prices
keep increasing at the same or even higher rates for a long time,
then possibly only the rich will actually be able to buy any houses
in many areas ...
And if that happens, the housing markets
might actually see steep fall in prices because most of the people
cannot afford houses ... and due to this, lots and lots of houses
might remain unsold.
Would that be a healthy trend then
If you think it's not, well ... that might be something even the
Government might not want that to happen ...
And what do they
do to prevent very high inflation ... like what is discussed above
The answer : They increase the interest rates ...
And when
interest rates increase, adjustable rate mortgages increase too ...
and if the interest rates increase significantly, the adjustable
rates increase significantly too ...
That's possibly why you
might want to stay away from adjustable rate mortgages.
And
what do you choose instead Well, you might want to consider
fixed rate mortgages ... since the possibility of fixed rate
mortgages increasing is relatively low.
And here is one other
thing you may want to do before you consider refinancing, and that
is ...
Get Multiple Refinance Quotes ...
And
why would you want to do that
Well, let's say you have 10
refinance quotes to choose from instead of a single quote ... you
now get to know what the market conditions are, you now get to see
the lowest rate you can have, you now get to analyze the terms much
better ...
And one happy coincidence of all this is that you
may make a much, much better decision about refinancing ...
You are actually educating yourself in the process, and saving a lot
of money too.
And remember - you might want to consider fixed
rate mortgages instead of adjustable rate mortgages. |
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