|
Adjustable Rate
Mortgage Loan Details
An adjustable rate mortgage (ARM) is a
mortgage loan that is subject to changes in
interest rates. When rates change, ARM
monthly payments increase or decrease at
intervals that are determined by the lender.
The change in the monthly payment amount,
however, is usually subject to a cap or
limit.
Adjustable
rate mortgages can be structured as a first
or second mortgage (usually in the form of a
home equity line of credit). Perfect credit
is not required for an adjustable rate
mortgage. Many mortgage lenders offer them
for less than perfect credit (sub-prime
lenders).
Do not
make assumptions. If you are unsure about
anything...
ASK YOUR MORTGAGE COMPANY QUESTIONS!
1. Inquire about all fees and costs
associated with this loan, including the
mortgage rate and APR (annual percentage
rate), the intervals
between rate adjustments and the cap set on
those adjustments.
As with any
residential mortgage loan....
2. Do not
assume that the mortgage interest of this
loan will be tax deductible. Consult a
qualified tax advisor for potential tax
benefits.
3. Be sure to ask if there is a
pre-payment penalty for paying off the loan
too early or making substantially large
payments against the principal.
|