 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
| CLICK to SAVE $$$$ Money |
| Add us to your FAVORITES and Check Back Often for More Real Life Information and ESOs on Various Topics |
| Thank you for Visiting and/or Sharing! |
Overview Everyday Life Self Relationships Parenting Spirituality Making a Difference College Life Career Homes
| © Copyright 2009. All rights reserved. |
Disclaimer
All information is provided as is. Additional research, information verification, and professional consultation should be done before using any
information provided on this site or any site linked to from this site. We make no guaranties as to accuracy, content, truthfulness, quality, or
fitness for a particular purpose of any of the information presented on this site. We do not assume any legal liabi ty or responsibility for any
incorrect, misleading, outdated, or missing information. Additionally, we do not assume any legal liability or responsibility for the contents,
offers and/or actions of any off site pages and/or web sites that are referenced in this site or are linked to from this site. All web pages
presented on this site are subject to copyright law protection, whether stated or implied - all rights reserved.
All information is provided as is. Additional research, information verification, and professional consultation should be done before using any
information provided on this site or any site linked to from this site. We make no guaranties as to accuracy, content, truthfulness, quality, or
fitness for a particular purpose of any of the information presented on this site. We do not assume any legal liabi ty or responsibility for any
incorrect, misleading, outdated, or missing information. Additionally, we do not assume any legal liability or responsibility for the contents,
offers and/or actions of any off site pages and/or web sites that are referenced in this site or are linked to from this site. All web pages
presented on this site are subject to copyright law protection, whether stated or implied - all rights reserved.
| Become a fan on FACEBOOK, you'll get the RealESO updates. |
| Real Life Information... on Home Related Topics - Mortgage Information |
Home Prices, Home Equity, and ARMs
Sometimes home prices rise rapidly, allowing people to quickly build equity in their
homes. This can make some people think that even if the rate and payments on their
ARM get too high, they can avoid those higher payments by refinancing their loan or,
in the worst case, selling their home. It's important to remember that home prices do
not always go up quickly--they may increase a little or remain the same, and
sometimes they fall. If housing prices fall, your home may not be worth as much as you
owe on the mortgage. Also, you may find it difficult to refinance your loan to get a
lower monthly payment or rate. Even if home prices stay the same, if your loan lets
you make minimum payments (see payment-option ARMs), you may owe your lender
more on your mortgage than you could get from selling your home.
Next: Adjustable Rate Mortgages Cont’d
Back to: Mortgage Overview
Sometimes home prices rise rapidly, allowing people to quickly build equity in their
homes. This can make some people think that even if the rate and payments on their
ARM get too high, they can avoid those higher payments by refinancing their loan or,
in the worst case, selling their home. It's important to remember that home prices do
not always go up quickly--they may increase a little or remain the same, and
sometimes they fall. If housing prices fall, your home may not be worth as much as you
owe on the mortgage. Also, you may find it difficult to refinance your loan to get a
lower monthly payment or rate. Even if home prices stay the same, if your loan lets
you make minimum payments (see payment-option ARMs), you may owe your lender
more on your mortgage than you could get from selling your home.
Next: Adjustable Rate Mortgages Cont’d
Back to: Mortgage Overview
Adjustable Rate Mortgages (ARMS)
If you have an interest-only ARM, payment shock can
also occur when the interest-only period ends. Or, if
you have a payment-option ARM, payment shock can
happen when the loan is recast. The following first 7
years of their terms; the payments shown are
also occur when the interest-only period ends. Or, if
you have a payment-option ARM, payment shock can
happen when the loan is recast. The following first 7
years of their terms; the payments shown are
for years 1, 6, and 7 of the mortgage, assuming you make interest-only payments or
over the life of the loan--so while you could save money in the first few years of an
ARM, you could also face much higher payments in the future.The main point is that,
depending on the terms and conditions of your mortgage and changes in interest
rates, ARM payments can change quite a bit over the life of the loan--so while you
could save money in the first few years of an ARM, you could also face much higher
payments in the future.
over the life of the loan--so while you could save money in the first few years of an
ARM, you could also face much higher payments in the future.The main point is that,
depending on the terms and conditions of your mortgage and changes in interest
rates, ARM payments can change quite a bit over the life of the loan--so while you
could save money in the first few years of an ARM, you could also face much higher
payments in the future.
Negative amortization--When you owe more money than you borrowed
make all your required payments on time. It occurs whenever your monthly mortgage
payments are not large enough to pay all of the interest due on your mortgage--the
than you originally borrowed. This can happen because you are making only minimum
payments on a payment-option mortgage or because your loan has a payment cap.
make all your required payments on time. It occurs whenever your monthly mortgage
payments are not large enough to pay all of the interest due on your mortgage--the
than you originally borrowed. This can happen because you are making only minimum
payments on a payment-option mortgage or because your loan has a payment cap.
Because payment caps limit only the amount of payment increases, and not
interest-rate increases, payments sometimes do not cover all the interest due on your
loan. This means that the unpaid interest is automatically added to your debt, and
interest may be charged on that amount. You might owe the lender more later in the
loan term than you did at the beginning.
interest-rate increases, payments sometimes do not cover all the interest due on your
loan. This means that the unpaid interest is automatically added to your debt, and
interest may be charged on that amount. You might owe the lender more later in the
loan term than you did at the beginning.
A payment cap limits the increase in your monthly payment by deferring some of the
interest. Eventually, you would have to repay the higher remaining loan balance at the
interest rate then in effect. When this happens, there may be a substantial increase in
your monthly payment.
Some mortgages include a cap on negative amortization. The cap typically limits the
total amount you can owe to 110% to 125% of the original loan amount. When you
reach that point, the lender will set the monthly payment amounts to fully repay the
could be substantially higher. You may limit negative amortization by voluntarily
increasing your monthly payment.
Be sure you know whether the ARM you are considering can have negative
amortization.
interest. Eventually, you would have to repay the higher remaining loan balance at the
interest rate then in effect. When this happens, there may be a substantial increase in
your monthly payment.
Some mortgages include a cap on negative amortization. The cap typically limits the
total amount you can owe to 110% to 125% of the original loan amount. When you
reach that point, the lender will set the monthly payment amounts to fully repay the
could be substantially higher. You may limit negative amortization by voluntarily
increasing your monthly payment.
Be sure you know whether the ARM you are considering can have negative
amortization.
For example, suppose you have a $200,000, 30-year payment-option ARM with a 2%
rate for the first 3 months and a 6% rate for the remaining 9 months of the year. Your
minimum payment for the year is $739.24, as shown in the graph above. However,
once the 6% rate is applied to your loan balance, you are no longer covering the
balance at the end of the first year of your mortgage would be $201,118--or $1,118
more than you originally borrowed.
rate for the first 3 months and a 6% rate for the remaining 9 months of the year. Your
minimum payment for the year is $739.24, as shown in the graph above. However,
once the 6% rate is applied to your loan balance, you are no longer covering the
balance at the end of the first year of your mortgage would be $201,118--or $1,118
more than you originally borrowed.
Advertisements 1a |
Try a free sample Personal Astrology Profile from Astrology.com!
Browse the best in Christian products at FamilyChristian.com.
Hungry? - Order food fast and easy with Delivery.com. Earn points towards prizes and cash on every order!
Get free shipping on your first order from PhotoWorks when you use the coupon code MYFIRSTORDER! Hurry, this offer won't last forever!
Photo Gifts!
Photo Items/Gifts!
FREE STAMPS
Stamps.com: Get Up to $25 in FREE Postage!
| Buy your Unique 1-Page Photo Calendars, Perpetual Calendars & Weekly/Yearly Planners at www.JTCcreations.com Many great styles using your photos or ours. FREE U.S. S&H when you order today with Promo Code "RFS1"! |
