Chief Executive Officer of E Mortgage Management, LLC
Even if you borrow money from an expert like Gregory Englesbe, it is important to understand how rate products work. Adjustable rates change during the lifespan of a mortgage because of the terms. There are two parts in the life of an adjustable-rate mortgage. During the first part, the rate remains fixed and the mortgage behaves like a fixed-rate mortgage. During the second part, the rate changes periodically. These periods may or may not be equal in length to the initial fixed-rate period. For example, an adjustable rate mortgage with an initial rate period of three years may start adjusting annually after the three year period ends. The initial fixed rate and the description of the following adjustments are contained in what’s known as the ARM Disclosure. Make sure you study the document before you accept the terms of your ARM.
The type of mortgage that is right for you depends on your situation. If you are happy with the fixed-term rate that you can get and you plan on living in the home for at least several years, go with a fixed-term mortgage. If you don’t plan on staying in the home for a long time or anticipate changes in your financial situation, an ARM may be the way to go. If you need a consultation, contact a professional like Gregory Englesbe to discuss your options.