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What is a Fixed-To-Adjustable Rate Mortgage?
This type of mortgage offers fixed payments for an initial loan period of up to10 years then followed by an adjustable interest rate for the remaining term of your mortgage. Payments are usually lower than most fixed rate mortgages.
Why should you consider a Fixed-To-Adjustable rate mortgage?
If you plan to live in your home less than 10 years, you can then consider this type of mortgage. You can even customize your rate and payments by selecting the fixed rate mortgage that match how long you plan to live in your home.
What are the benefits of a Fixed-To-Adjustable rate mortgage?
You can choose a mortgage depending on the amount of time you are going to you remain in your home.
You can choose an initial fixed rate loan--whether it would be 3, 5, 7 or 10 years. You can enjoy the security of paying a fixed rates for the initial loan. The mortgage rate will then become adjustable after your timeframe with a lifetime rate cap if the interest rate increases after the initial fixed rate. Your monthly payments will probably increase.
You potentially pay a lower interest rate with the initial fixed rate loan then you would get with the traditional 30 year fixed rate mortgage.
You can benefit from rates on this type of mortgage based on the London Interbank Offered Rates Index, which is typically lower than the average fixed rate.
Large loan amounts are usually available.
Secure your interest rate with this locked in rate.
Simultaneously, you can establish a home equity line of credit.
You can take advantage of available payment options. You can make interest only or fully amortized payments during the initial loan. Then after the initial interest only period, your monthly payments will increase because it was based on a fully amortized repayment schedule of principal and interest.
You can prepay principal at any time without a penalty. If the principal payments are made during the interest only, your payments will then be recalculated monthly based on this new lower principal balance. There is usually no fee for the service.
The lifetime cap is based on the loan amount and the initial fixed rate term that you selected.
The periodic rate is based on the adjustable period for the remaining term of your home mortgage loan you selected.
You really need to sit down with your mortgage broker and figure out if this type of payment option is right for you. Are you only planning on staying up to 10 years in your new home? If not, the interest rates can be very high depending on the economy, and you may not be able to afford your monthly home payments with the adjustable rate mortgage.
Copyright 2005 Fern Kuhn, RN
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Top 10 Things to Consider on Home Loans
Here are our Top 10 most important things to consider when shopping for a Home Loan, Equity Line of Credit, or Refinance, courtesy of Loans-Directory.Org:
No Deposit Home Loans
A few years ago, many of us would have had a light chuckle to ourselves if someone mentioned that you could borrow money to buy a house with only the promise of solid future earnings. But today this is a regular occurrence. Many of the industry's non-conforming lenders are selling these financial products to many happy consumers, with most of the major banks avoiding this riskier route.
Home Equity Loan ? Still a Better Idea Than a 401(K) Loan
Anyone who borrows money is always looking for the cheapest source of funding. That makes sense; no one wants to pay more in interest than is absolutely necessary. And anyone with a sizeable amount of debt, such as credit card debt or a student loan, would be wise to consolidate their debt with a lower interest loan. One source of such a loan is a 401(K) account, which many consumers may have through their employer. Since the interest rate on Federal student loans rose on July 1, many students who missed that deadline may be wondering if consolidating through a 401(K) loan is a good alternative. Is it?
Real Estate Tip: Escrow Accounts -- Do You Really Need Them?
If you have a mortgage on your property, whether it's for your personal residence or a real estate investment, chances are you have an escrow account. But if you are working on building wealth through real estate, you may want to take a hard look at your escrow account (or accounts, if you own more than one piece of real estate) and decide if you really need it.
Applying for a Home Mortgage Loan Online - The Pros and Cons
If you have considered applying for a home loan mortgage online, there are a few pros and cons to think about with getting a home mortgage loan online:
Why Get Pre-Approved For A Mortgage?
One of the most important steps in the home buying process is getting Pre-Approved as early as possible.
A Mortgage Loan For Homes
Everybody wants to own a house because it is something that portrays your success in life. Some people make some ways on how to own one by considering a lot of things including borrowing money from banks, lending offices and finance institutions. A great option for people who really wants to have an investment is to engage in mortgage. Mortgage is an important thing in having loans. It is essential if you are planning to build a business and have some investments but your budget can't reach the exact amount you need.
Getting a Home Improvement Loan: What Your Bank Needs
The popularity of stores like Home Depot and Lowe's show how many homeowners are jumping on the home improvement bandwagon. Maybe you're thinking of redoing part of your house as well. Perhaps you want the kitchen of your dreams or an extra bathroom. You know you'll have to take out a loan to finance the project, but if you're just in the beginning stages of the planning, you may not know exactly how to go about it. Whether you're refinancing or taking out a home-equity loan, here's some information on what your bank needs:
Tips for First Time Home Buyers
When looking at tips for first time home buyers, you've come to the right place. Many people are looking all over the Internet for reliable information. There's over 761,940 websites (as of March 05) with information or online forms urging you to fill them out for more details.
What is an Interest Only Mortgage?
An Interest Only Mortgage is one where the repayments are made up entirely of the interest on the loan. When the mortgage term is complete, the capital originally borrowed is still outstanding.
Bad Credit Mortgage Lenders - Things You Should Know About Subprime Lenders
Interest rates and fees vary between subprime lenders just like regular mortgage lenders. Just because you have bad credit, that doesn't mean you should accept the first financing offer from a subprime lender. Take the time to do your research, and you can make sure you are getting the best deal in terms of interest rates and fees.
Home Equity Loans 101
A secured home loan differs from an unsecured loan in that the secured loan borrows against one's home as collateral, thereby reducing the risk to the lender.
Home Loans For People With Poor Credit - Understanding The Requirements For a Subprime Mortgage
Home loans for people with poor credit demand that you understand the requirements for a subprime mortgage loan to get the best rates and terms. By satisfying the requirements, you can be assured of securing a subprime mortgage to buy a home.
Mortgage Info You Can Actually Understand!
This is a great time to Refinance Your Home or Buy a New Home -- the Mortgage Rates are so low, these days! It's always worth a shot to find out what the costs of switching over to a new mortgage would be, to see if that's the right move for you.
A mortgage is borrowing money using property as a security, a type of secured loan in other words. Primarily, the purpose in borrowing the money is to purchase a property.
How to Buy a Home Without a Down Payment
Mortgage rates are rising and it's becoming more difficult for a prospective buyer to save up for the necessary down payment. Fortunately, there are ways around this hurdle.
What Exactly Is A Reverse Mortgage And How Does It Work?
A reverse mortgage is a certain loan that allows the older generation to take their home equity and turn it into cash. With this type of loan the bank is actually paying you monthly out of the equity in your home. The funds from reverse mortgages can be used for whatever you like. Many people like to use it for taking a trip, home renovations, buying new furniture, or just for day to day living. Most people don't realize that they have this option with their homes equity.
Residential Mortgage - Finding The Best Home Mortgage Lender
Most people approach the act of getting a home mortgage purchase or refinance loan the wrong way. They timidly approach lenders and cross their fingers that they will quality for that all-important loan. But that's just the opposite of what most people should be doing!
Reverse Mortgages: When Is One Right For You?
How do you know if a reverse mortgage is right for you? The answer depends on your current financial situation of course.
Buying A Home? Reasons to Consider Financing Your New Home Loan Online
Financing your new home loan online can save you time and money. With information at your fingertips, you can quickly educate yourself about the loan process and compare mortgage lenders to find the best rates. With 24 hour access to mortgage lenders, you can lower your financing costs from the convenience of your home.
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