Adjustable Rate Mortgages
 (page
2 of 2)
Some Examples Of Indices Are:
- Government regulated interest rates.
- T Bills and the Federal Home Loan Bank.
- The rates of interest that banks may charge each other.
Such as LIBOR, London Inter-Bank Offering Rate.
Fluctuations in the interest rates that cause them to decrease are always
welcome news. But when interest rates increase, some times to much higher
levels, what can you expect? The majority of Arms have rate caps to protect
you just for this reason.
Two Specific ARM Rate Caps To Be Aware Of Are:
The Adjustment Period Cap
This will put a limit on the amount your rate can change at each adjustment
period. Typically anywhere between 1% and 2%.
The Lifetime Cap
Puts limits on the amount your rate can change starting with the initial
rate and continuing for the full term of the loan. Common caps are usually
from 6% to 7%.
BE AWARE:
You should look for another lender if the one you are currently dealing
with suggests that there is no need for a rate cap.
Click Here For
a Comparison Of Fixed Vs Adjustable Rate Mortgage Loans
|
