To understand an ARM, (ADJUSTABLE RATE mortgage) you must have a working knowledge of its components. Those components are: Index: A financial indicator that rises and falls, based primarily on economic fluctuations. It is usually an indicator and is therefore the basis of all future interest adjustments on the loan. Mortgage lenders currently use a variety […]
6-Month CD Rate This index is used in ARM mortgages and is the weekly average of secondary market interest rates on 6-month negotiable Certificates of Deposit. The interest rate on 6-month CD-indexed ARM loans is usually adjusted every 6 months. Index changes on a weekly basis and can be volatile. 1-year T-Bill This index is […]
A balloon mortgage has an interest rate that is fixed for an initial amount of time. At the end of the term, the remaining principal balance is due. At this time, the borrower has a choice to either refinance or pay off the remaining balance. There are no penalties to paying off a balloon mortgage […]
A reverse mortgage is a type of home equity loan that allows you to convert some of the existing equity in your home into cash while you retain ownership of the property. Equity is the current cash value of a home minus the current loan balance. A reverse mortgage works much like a traditional mortgage, […]
The many different types of loan programs available can seem overwhelming. Should you choose a fixed rate, adjustable rate or government loan mortgage? The truth is there is no right answer. Choosing a loan type is an important decision that is best made after you have researched your options. Remember, taking the time to explore […]
A conventional mortgage is a type of home loan that is not insured or guaranteed by the government. It is typically offered by private lenders, such as banks, credit unions, and mortgage companies, and is secured by a borrower’s promise to repay the loan. Conventional mortgages can have fixed or adjustable interest rates, and typically […]