Home » Finance » Mortgage

Adjustable Rate Mortgages Are OK For The Short Run

Aug 17, 2007
When you go for mortgage quotes for the first time, you'll find there are generally two major options available. The first, and most commonly sought after, is a fixed rate mortgage. The second option is an adjustable rate mortgage. Both are good options to get into a home, but there are some advantages to an adjustable mortgage that many don't consider.

An adjustable rate mortgage is simply a mortgage whose interest payments adjust up and down based on the going interest rate. This means those with an adjustable rate mortgage will be able to take full advantage of dips in interest rates while their fixed rate mortgage counterparts stay at the same payment amounts. It also, however, means these same people will pay more monthly when mortgage interest rates are high. Inasmuch, many people who get into adjustable rate mortgages do so with the intention of not staying in it for the full 30 years of a mortgage term. For a short-term solution, however, adjustable rate mortgages can be worth examination.

Considering the instability of adjustable mortgages, why would anyone want to go this route? There are a number of reasons. They include:

* Adjustable rate mortgages generally are offered to those with less than perfect credit. Lending companies are generally more willing to write this type of mortgage loan for those who have past issues. It might not be the most ideal situation for the long term, but it can give you the ability to get into a home, build equity and repair credit in the process.
* Adjustable rate mortgages allow homeowners to take full advantage of dips in the interest rates. This means their payments will be lower during good interest rate periods. The savings can be quite substantial, too. Unfortunately, this is one of the down falls of an adjustable rate mortgage, too. On the converse, when interest rates are high, the payments homeowners are subjected to can be rather high.
* Adjustable mortgages are generally offered at lower than the going rates to start off with. This means someone who needs extra money at the start of a new mortgage loan will likely be able to enjoy lower payments. Since the rate is lower than going, the payments typically will be lower than average. In many cases, this type of mortgage will start out with a locked in rate for a year or two, as well, which means the homeowner can save up for future issues.
* The lock in of lower rates for a short period with an adjustable rate mortgage can sometimes 'buy' a homeowner enough time to repair credit issues. This means they might be able to refinance for a good rate before interest rises. It's important for homeowners who go this route to take full advantage of periods without high payments to improve credit ratings. If the interest rates swing up, getting 'locked in' at a decent rate on a fixed will be the way to go.

Adjustable rate mortgages aren't for everyone, but for those who want to own a home while enjoying time to fix credit issues, they can be fantastic. It's important to carefully weigh the options before going into an adjustable rate mortgage, however.
About the Author
More information on mortgage rates
adjustable rate mortgage

http://www.mortgagerateshere.com
Rating:
Please Rate:
(Average: Not rated)
Views: 151
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources