Are you disciplined enough for an ARM?
Current mortgage rates for 30-year fixed rate loans are still at historic lows. Granted, they may not be as low as they once were, but in the grand scheme of things, these mortgage rates are still fantastic. That said, borrowers looking to land an even lower mortgage rates are considering adjustable rate mortgages (ARMs).
Would you be better off with an ARM, even though current fixed-rate loans are not far from their rock-bottom lows?
Is ARM refinancing a dumb move these days? Not at all
Adjustable rate mortgages (ARMs) were blamed by some financial commentators for the rise in foreclosures, so many homeowners are wary of them. Indeed, only 5 percent of mortgage applications at the end of 2010 were for ARMs. While it’s true that ARMs are a bit more complicated than fixed-rate loans, in an environment of rising mortgage rates, ARMs are especially worth a second look if you’re refinancing.
ARMs offer low initial mortgage rates
Weekly Recap (10/25/10-10/30/10), Halloween Edition
Saturday
“Frightened by your upcoming ARM reset?”
There’s nothing scarier than future uncertainty. When it comes to a mortgage and the monthly payments, the majority of borrowers like the stability that comes with a long-term, fixed-rate loan. You can eliminate the fear of an unknown future mortgage payment by choosing a fully fixed-rate mortgage.
Yet with conforming adjustable rate mortgage (ARM) interest rates hovering in the low-to-mid threes, there are more and more borrowers out there who are tempted to refinance back into an ARM. When someone asks me whether or not they should refinance back into an ARM vs a fixed-rate loan, my response is always akin to that old saying, “If the shoe fits, wear it.”
Frightened by your upcoming ARM reset?
There’s nothing scarier than future uncertainty. When it comes to a mortgage and the monthly payments, the majority of borrowers like the stability that comes with a long-term, fixed-rate loan. You can eliminate the fear of an unknown future mortgage payment by choosing a fully fixed-rate mortgage.
Yet with conforming adjustable rate mortgage (ARM) interest rates hovering in the low-to-mid threes, there are more and more borrowers out there who are tempted to refinance back into an ARM. When someone asks me whether or not they should refinance back into an ARM vs a fixed-rate loan, my response is always akin to that old saying, “If the shoe fits, wear it.”
ARM Borrowers: Is It Time To Refinance?
Everybody knows interest rates are low and that there’s a lot of refi activity going on. So instead of focusing this week’s Market Trends recap on last week’s movement of mortgage rates, we decided to examine the question “if I’m an ARM borrower, should I refi?”
In today’s market at least, fixed-rate to fixed-rate refinancing is arguably the most common occurrence. However, given the fact that short-term interest rates are so low, especially the short-term rates which govern ARMs, we wondered how many ARM borrowers would be interested in switching products?
With Rates This Low, Should I Keep My ARM?
I once again had the honor to write a guest post on the highly-regarded personal finance blog Get Rich Slowly (GRS).
In February, GRS reader Abby wrote in with some questions about her adjustable-rate mortgage (ARM). She’s had an ARM for seven years now, and the rate is due to reset in 2010. She wants to know what her best course of action is — continue with her current ARM, refi to a new ARM or refi to a fixed-rate loan?
New Sections Now Available at HSH.com
Part of the reason why so many visitors come back to HSH.com time and time again is because we have information and data that isn’t readily accessible anywhere else. Another reason why people keep coming back to our site is because HSH.com has been providing trusted, non-biased mortgage information for over 30 years.
HSH.com is pleased to announce the release of four new sections. While there has always been lots of great mortgage data available at HSH.com, now there are even more tools for homebuyers to track trends, compare loan products and find great mortgage deals.
The New ARM Debate
Over the next several months to a year, rates are expected to head in one direction: up. If you’re a borrower with an adjustable-rate mortgage (ARM) you’ve enjoyed reset rates recently as low as 3%. According to last week’s Market Trends Newsletter, the initial fixed interest rate for a Hybrid 5/1 ARM ticked one basis point higher to finish the survey week at 4.58%.
Does the forecast for rising rates signify that it’s time for ARM borrowers to refinance into a fixed-rate loan? Not exactly.
Borrowers: Have You Even Considered an ARM?
There are at least a couple reasons why you don’t hear much about adjustable rate mortgages (ARMs) anymore. Mainly it’s because the housing crisis has scared many borrowers away from any home-loan product without a fixed rate. Adjustable-rate products have gotten a bad wrap as they have been associated with other riskier characteristics like subprime credit or pay-option loans. While it’s true that hundreds of thousands of borrowers — who couldn’t properly afford an ARM in the first place — entered into default because their monthly payments increased when the rate on their ARM reset higher, we have fervently defended that ARMs are certainly not ‘evil’ or ‘toxic,’ if applied correctly.
Another reason why ARMs have been put on the back burner of borrowers’ minds is because the recent initiatives by the federal government aimed at lowering mortgage rates have been designed for conforming, fixed-rate products. “While ARMs aren’t very popular at the moment, they can still be used to a homebuyer’s advantage,” according to the latest issue of HSH.com’s Market Trends Newsletter. Here’s why: Read the rest of this entry »
