• 10/1 year Adjustable Mortgage Rates:
In the case of a 10/1 year adjustable mortgage rate, the monthly payments and the interest rate do not change for a period of ten years.
From the 11th year onwards, the mortgage rates are adjusted on an annual basis. That is, the rates tend to fluctuate every year thereafter.
You should opt for this type of adjustable mortgage rate in the following situations:
• If you are planning to shift to a new place within 10 years.
• If your plans are likely to change, and you would like the loan to remain in effect.
• If you are planning to live for more than 10 years in a particular home.
• If you are willing to have initial payment stability.
• 5/5 & 5/1 year Adjustable Mortgage Rates:
In this case, the monthly payments, and the mortgage interest rates remain the same for a period of five years.
From the 6th year onwards, the mortgage rates are adjusted either on an annual basis (5/1 ARM) or every five years (5/5 ARM).
• 3/3 & 3/1 year Adjustable Mortgage Rates:
In this case, the monthly payments, and the mortgage interest rates remain the same for a period of three years.
From the 4th year onwards, the mortgage rates are adjusted either on an annual basis (3/1 ARM) or every three years (3/3 ARM).
• 1 year Adjustable Mortgage Rates:
In this case, the monthly payments and the mortgage interest rates are adjusted annually for the entire loan term of 30 years.
One must opt for this kind of adjustable mortgage rate in the following situation:
• If you are willing to have the lowest rate possible.
• If you are not able to qualify for higher rate programs.
• If you are ready to cope up with the annual payment changes
Thus, depending upon the borrower’s personal and financial situation, he can decide the type of adjustable mortgage rate that he needs
http://www.GreatLoanPrograms.com
Article Source: http://EzineArticles.com/?expert=Eshwarya_Patel
