Another common type of home loan is the adjustable rate mortgage or ARM. With this type of loan, the interest rate will fluctuate depending on the 6 different real estate indexes.
The interest rate changes so the lender of the loan gets a proper margin. Thats due to the fact that the indexes influence the cost of funding that loan in the first place.
Basically, your lender lets you take on a little bit of the interest risk instead of just the lender like in a fixed rate loan. This type of loan can be great if the interest on your home loan consistently falls for a long time.
You dont have to worry that much about the interest rates because even if they jump drastically, there are limits on how much your payments will increase.
These limits are called caps and mean that no matter the size of the interest jump, you wont pay more than a certain increase in a certain time period.
As an example, lets say a lender gives you an adjustable rate mortgage. It has a 1 percent cap for any 6 month time frame and a 4 percent total cap for the entire loan.
Your payments can increase as much as 4 percent at the maximum until the loan is paid off. Thats...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
