A 1/1 adjustable mortgage rate is a type of mortgage that guarantees a fixed rate for the first year of the mortgage and then adjusts once a year for the remaining loan period. This is a very common loan program that is offered by Fannie Mae. With a 1/1 adjustable mortgage rate, after the initial period the interest rate will go up or down depending on current market rates. If you decide to accept this type of mortgage you must give consideration to the fact that interest rates are very low right now and when your mortgage rate adjusts it will be go higher. These types of loans were very popular when rates were very high, but may not be the best deal now.
Is An Adjustable Mortgage Rate Ever A Good Deal?
When you get an adjustable rate mortgage the initial period is always a very lucrative deal. You may even receive a mortgage rate that is lower than the current market. However, when your mortgage rate adjusts you may find your self paying double each month for your mortgage payment. Adjustable mortgage rates have been blamed as one of the leading causes of the mortgage eltdown that has taken place in the country. If you are planning on short term lending you may wish to utilize this type of loan. You must be able to obtain financing again, at a later date, to ensure that when the adjustable mortgage rate changes you can refinance to a lower, fixed rate.
When Should I Get An Adjustable Mortgage Rate?
If you have the opportunity to purchase a home at a very good deal, and all you qualify for is an adjustable mortgage rate, take the deal. During the fixed interest period save for an additional deposit or use the time to clean up your credit file. At a later date, when the mortgage adjusts, you will be able to qualify for a fixed rate mortgage. Missing out on an incredible real estate deal is never a good idea. Housing process will begin to rise again; the time to purchase is now.
Related posts:
- When is an Adjustable Rate Mortgage a Good Idea?
- Is Your Adjustable Rate Mortgage Loan At Risk?
- Why Choose A 5/1 Adjustable Rate Mortgage?
View full mortgage loans post on US Mortgage Rates
Tags: deal, Mortgage, adjustable mortgage rates, fixed rate mortgage, interest, mortgage rate changes
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