Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Why is an adjustable rate mortgage so popular?

By Apil Gupta Subscribe to RSS | June 24th 2012 | Views:
loading
 
  



An Adjustable Rate Mortgage (mortgage ARM, for short), also known as the lender's Standard Variable Rate, is the most elementary mortgage type that can be availed by a person willing to purchase a house. The recent years have seen them being increasingly opted for by prospective homeowners in the US to finance their dream house. As against trends of the yesteryears, Adjustable Rate Mortgage has shifted gears from being one of the options in case other mortgage types didn't work out quite as well, to being the first choice of millions. Let's explore the reasons for this.

To begin with, mortgage ARM is a 'no frills attached' mortgage product that has many advantages that are perfect for to-be homeowners, some of them being discounted mortgages, fixed rates and tracker mortgages. The major benefit here is that even if the market fluctuations cause the prevailing interest rates to rise, the homeowner does not have to bear the brunt of the same, as it would not have even the slightest impact on his monthly payments. However, in order to safeguard themselves in case of the aforementioned situation becoming a reality, the lender has quite a few criteria to make sure that not everybody can avail a mortgage ARM. Further, these criteria are generally not prevalent in case of adjustable rate loans.

The flexibility offered in case of an Adjustable Rate Mortgage is what mainly drives the demand for this kind of a financing option. In case of all the offer types of mortgages, there exist lock in periods and penalties, but in case of a person being on the lender's most basic variable rate product, it is not uncommon to enter and exit as per one's discretion. Also, in case one wants to change the mortgage type, or for that matter the lender as well, there is no need to pay any extra fees as well, strengthening the cause for one to go for a mortgage ARM.

Lower monthly payment costs are another one of this type of mortgage's main plus points. Since the lender does not have any kind of discount to offer, in which he can lock in the borrower for a fixed period of time, this also means that he does not have a discount that he might try to recoup. Due to this, an Adjustable Rate Mortgage is much more cheaper at the beginning compared to other offers.

Another fantastic advantage of going for this kind of mortgage is that in case the prevailing interest rates in the market drop, then the borrowers monthly payments also drop in sync with the base rates. But on the flip-side, if the rates are at an all time low, they will obviously increase, and consequently, so will the monthly payments.

In the earlier days, mortgage ARMs were seen as the kind of mortgage one should get rid of as soon as possible, but with base rates constantly fluctuating and lenders following the same to decide their own interest rates, this type of mortgage is suddenly much in demand.

Apil Gupta - About Author:
Author is providing Low Mortgage rates, Finance, Refinance , Loans in California, USA.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/mortgage-articles/why-is-an-adjustable-rate-mortgage-so-popular.htm

Related Mortgage Articles Subscribe to RSS

How to procure loans at Best adjustable mortgage rates?
Published by Jack Smith on June 24th 2012 | Mortgage
The above points can easily help a borrower to seek loans at best rates while saving his money and m...
 
The best mortgage rate is only a systematic approach away!
Published by Jack Smith on May 22nd 2012 | Mortgage
Investigate the property market well and fulfill your dream of achieving the best mortgage rate for ...
 
The top 5 most preferred mortgage types
Published by Apil Gupta on June 24th 2012 | Mortgage
When it comes to choosing the mortgage types that are available to a home buyer, the options are apl...
 
The coming back of the long-term fixed rate mortgage
Published by DavidVila on February 14th 2012 | Mortgage
There is a return of long-term deal of mortgage that is as long as 7 years as well as 10 years. Skip...
 
Appeal for best adjustable mortgage rates
Published by Jack Smith on July 25th 2012 | Mortgage
In the field of getting adjustable interest rates via the options of best adjustable mortgage rates ...
 
Be informed about Colorado mortgage or Denver mortgage and make a wise decision
Published by Serena Woods on February 15th 2012 | Mortgage
Being informed is never bad especially when you need to make an important financial decision....
 
Your guide to getting the best mortgage rates
Published by Jack Smith on April 18th 2012 | Mortgage
A systematic and well guided approach will certainly assist you in achieving the best mortgage rate ...
 
Good mortgage rates are important for a comfortable mortgage period
Published by Jack Smith on June 22nd 2012 | Mortgage
Get mortgage rates that you can easily pay off even in the future because a mortgage affair can last...
 
Why is an adjustable rate mortgage so popular?
Published by Apil Gupta on June 24th 2012 | Mortgage
An Adjustable Rate Mortgage (mortgage ARM, for short), also known as the lender's Standard Variable ...
 
US mortgage rates hit record low at 3.66%
Published by Apil Gupta on July 16th 2012 | Mortgage
There was a significant drop in the US mortgage rates for 30 year fixed loans...
 
The real truth about mortgage rates
Published by Jack Smith on April 16th 2012 | Mortgage
While mortgage rates may differ with several companies and diverse plans¸ a good, hard-working barg...
 
Your guide to finding the best mortgage rates
Published by Jack Smith on April 13th 2012 | Mortgage
The best mortgage rate may have to be decided upon after exploring several options but will be certa...
 
Low interest rate brings cheaper mortgage deals
Published by Sandra Jeux on January 25th 2012 | Mortgage
Interest rates are at the lowest side for mortgages at current time which is leading people of the c...
 
Beware of Yield Spread Premium on California mortgage rates
Published by Apil Gupta on June 24th 2012 | Mortgage
If you are going to refinance your mortgage because the California mortgage rates on your current pr...
 
Low interest rate brings cheaper mortgage deals
Published by Sandra Jeux on January 25th 2012 | Mortgage
Interest rates are at the lowest side for mortgages at current time which is leading people of the c...
 
The best way of getting bad credit mortgage rates
Published by Jack Smith on June 20th 2012 | Mortgage
Be careful of getting axed by any broker while finding the best bad credit mortgage rates, as mean p...
 
Looking for refinance mortgage loan - How to find the right one
Published by Apil Gupta on June 24th 2012 | Mortgage
In case you are looking to refinance mortgage loan for your home, there are many things that need co...
 
Tips to taken into consideration while choosing mortgage brokers
Published by Geno on March 28th 2012 | Finance
Majority of the home buyers get struck off when it comes to mortgage loans. Lack of knowledge about ...
 
Consult well about Adjustable mortgage rates before selecting
Published by Jack Smith on July 23rd 2012 | Mortgage
Adjustable mortgage rates are turning worldwide popular because they offer variations on the rate of...
 
You can still borrow money with bad credit mortgage
Published by Jack Smith on June 24th 2012 | Mortgage
Bad credit mortgage is really helpful for those who have bad history in past, and with the help of t...