fixed rate

I'm sure the question "Why should I have an Adjustable Rate Mortgage when I can a 30-year fixed-rate interest rate XX?" It was a plethora ever wondered why the two types of loans were made against each other. Of course, no matter what he says or does anything, there will always be advantages and disadvantages of both parties. One of the main advantages of the ARM has all the different sub-products in this category. For example, the3 / 1 ARM 5 / 1 ARM, just to name a few.

The fixed rate is on these sub-products. Traditionally speaking, you have 3 basic fixed-income products: first, 20 years, 30 years. 15 (I'm sure some will say, there are others, but we just have to keep at a level traditionally spoken) Then this thing pay option arm that throws a wrench big enough in the "fixed rate vs. ARM" argument. Why do I say this? The answer is simpleSince this product fully accepts one of the major topics people are against the arm: "I do not know how much will my monthly payment up or down I do not like the uncertainty of the concept ARM payment .." You see, with the POA can only include the payment to the penny (worst case) would be for the next 5 years and with some products up to 10 years.

So the guessing game now is out of the equation. Now comes with the POA a whole new debate about a latentInterest (sometimes referred to as negative amortization).

I will not go into a lot of details here, but deferred interest, if properly understood, can be used to great advantage to the borrower. In short, the deferred interest yield advantage of leverage for the borrower, without the uncertainty of payment. E 'is completely the borrowers have a choice in negative amortization. If the borrower chooses to do this, then other aspects of his lifebenefits. Unfortunately, because the way in which the POA is sometimes explained to the borrower, this is not the case. And 'our duty to ensure mortgage professionals to ensure that the borrower gets the right information at the POA. The next statement is more difficult with a broker, I say loud and clear ... If you have a license to do so, we can not say ANYTHING borrowers with their money! WE ARE NOT financial advisors. NOT giving financial advice!

Our taskBrokers borrowers make is that our understanding of the type of mortgage product and program that we sell, are not financial advice. Again, some debate broker, do with me, but if they are duly authorized to do, there is no debate ... Time! Once you understand this, you can have a good relationship with someone who is licensed and that you can move back and forth going to develop.

This is not rocket science people. The reason why I have all up, becauseI recently had several borrowers come to me and told me that this deal POA had a few years ago and has not been said about the stuff deferred interest. Most of these people have committed a POA for the LIBOR index. If you look at charts, you can see that the LIBOR has risen sharply in recent years.

Do not get me wrong, I'm not knocking the index, I am disappointed that the borrower, the broker that sells mortgage products without explaining the ups and downs of the product. It isNow that a lot of pressure on brokers to understand the product (and indexes) to "fix" the mentality of the borrowers of a misunderstanding, as they actually beneficial to the POA. Which brings us right back to the question: "Why should I use an Adjustable Rate Mortgage when I receive interest on a 30 year fixed rate XX?" The best answer I can come is "It depends on how you use the loan and what is best for yourSituation. "

fixed rate