tag:blogger.com,1999:blog-32639162.post115844724788830261..comments2023-12-07T01:00:56.264-05:00Comments on My Wealth Builder: Avoiding an Expensive Mortgage MistakeSuper Saverhttp://www.blogger.com/profile/11172939501208456194noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-32639162.post-16548545965137454462010-06-18T01:48:24.438-04:002010-06-18T01:48:24.438-04:00Thanks for the post. The information on ARM's ...Thanks for the post. The information on ARM's and FRM's is very efficiently explained.Kellyhttps://www.blogger.com/profile/00250172614136379249noreply@blogger.comtag:blogger.com,1999:blog-32639162.post-1158791746902351882006-09-20T18:35:00.000-04:002006-09-20T18:35:00.000-04:00Thanks for the suggestion. I appreciate comments...Thanks for the suggestion. I appreciate comments on what content may be of interest to readers. I have another real estate post that also has additional information. I will consolidate both updates into one future real estate post.Super Saverhttps://www.blogger.com/profile/11172939501208456194noreply@blogger.comtag:blogger.com,1999:blog-32639162.post-1158722312358735452006-09-19T23:18:00.000-04:002006-09-19T23:18:00.000-04:00You should probably make a post out of this. I am ...You should probably make a post out of this. I am sure many people will be interested in this information. Thanks much.GolbGuruhttps://www.blogger.com/profile/17172183349408960827noreply@blogger.comtag:blogger.com,1999:blog-32639162.post-1158495560877816252006-09-17T08:19:00.000-04:002006-09-17T08:19:00.000-04:00Good question. The answer is yes there are limitat...Good question. The answer is yes there are limitations to interest increase and decrease (in a declining rate environments) amounts. There are usually two caps, one for each adjustment and one for the life of the loan. The adjustment cap is the maximum change that can occur for the periodic changes – typically around 1-2% but can be as high as 5%. For example, if a loan has a 2% adjustment cap and interest rates rise 4%, the loan interest is only increased 2% for the next period. The life of the loan cap is the maximum change from the initial rate that can happen over the full term – typically around 5%, I think. So if your initial rate is 5.5%, the minimum and maximum rates anytime during the life of the loan are 0.5% (we wish:-) and 10.5% (arrgh) respectively.<BR/><BR/>There are also limitations the frequency of adjustment.<BR/><BR/><B>Fixed Rate Period.</B> ARMs typically have a period when the interest interest is fixed. Typically, it is 1, 3, 5 or 7 years. The longer the fixed period, the higher the intial interested rate.<BR/><BR/><B>Adjustment Period.</B> After the fixed rate period, ARMs will adjust once or twice a year. Usually, 1 indicates a yearly adjustment, and a 6 indicates an adjustment every 6 months.<BR/><BR/>For example, an ARM with a 3 year fixed period and adjustment every year after 3 is a 3/1 ARM.<BR/><BR/>The issue is that many people use an ARM because it has a lower payment than a fixed rate mortgage, and they could not afford or qualify for the fixed rate mortgage. With interest rates rising over the last 3 years, some of these people are experiencing the same affordability difficulty again, even with caps.Super Saverhttps://www.blogger.com/profile/11172939501208456194noreply@blogger.comtag:blogger.com,1999:blog-32639162.post-1158479580996060942006-09-17T03:53:00.000-04:002006-09-17T03:53:00.000-04:00Is there some kind of a interest rate cap for ARMs...Is there some kind of a interest rate cap for ARMs ? or they are going to keep rising till people cant afford them anymore? With the falling gasoline prices, there are chances that the economy may heat up and fuel interest rate hikes.GolbGuruhttps://www.blogger.com/profile/17172183349408960827noreply@blogger.com