Wednesday, February 12, 2014 - Article by: Prospect Financial Group, Inc. -
You have probably already heard that the popularity of adjustable-rate mortgages (ARM) is expected to rise over the course of 2014. With the interest rates on fixed-rate loan program increasing, the low interest rates on the initial fixed-rate on an ARM are becoming a very attractive offer.
Many industry experts have predicted that the interest rate for a 30-year fixed-rate loan will climb to the 5.5 percent mark by the end of 2014. New lender regulations, the Federal Reserve's continued tapering and continued economic improvement are all leading the rising interest rates.
While the attractively low interest rates on an ARM might seem like a great option for many borrowers, an ARM is not right for everyone. The most common options for an ARM include 5/1 ARMs, 7/1 ARMs and 10/1 ARMs where the interest rate is fixed for either a period of 5, 7 or 10 years before adjusting on an annual basis for the remaining life of the loan.
When considering an ARM, you must take into account how long you will be in the home. Are you planning on living in the home for 5 to 10 years before selling? Or are you planning on making this your forever home? If the latter is the case, then an ARM is probably not the best option for you. A 30-year fixed-rate will guarantee the same monthly payment for the entire life of the loan. However, if this is going to be more of a short-term home (or if you are refinancing and planning on selling in 5 to 10 years), then an ARM is a great option.
Call the lending experts at Prospect Financial Group, Inc. to go over your financial position and to determine which loan option is the best fit for you. Call 858-605-0952 today!
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