Adjustable-Rate Mortgages – Interest Rate Strategy

Over the last few years, many people squeezed into new homes using adjustable-rate mortgages. With interest rates going up, you now need a new interest rate strategy

Adjustable Rate Mortgages – ARMs

Adjustable-rate mortgages carry a bit of a gamble for homeowners. Essentially, you trade smaller interest rates, and lower initial payments on the gamble rates will not increase over time. If rates stay low, you make out like a bandit. If rates increase, you need to consider your options to avoid getting stuck with a high-interest rate loan and resulting cash flow problems from increased monthly mortgage payments.

For the last three or four years, adjustable-rate mortgages have been offered with incredibly low-interest rates. Many people used these low, low, low rates to buy homes that would otherwise be beyond their means. Starting in 2004, Federal Reserve Chairman Alan Greenspan started making noises about increasing money borrowing rates. He has followed through on these hints. Although mortgage rates aren’t tied directly to the Federal Reserve Bank, they are heavily influenced by it. As a result, many people are now facing tight finances.

Avoid Rising Rates

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