| loan for house purchase in the United Kingdom but are unpopular in some other countries. Variable rate mortgages are very common in home equity rate comparison and New Zealand. For those who plan to move within a relatively short period of time (three to seven years), they are attractive because they often include a lower, fixed rate of interest for the first three, five, or seven years of the loan, after which the interest rate fluctuates. Adjustable rate mortgages, like other types of mortgage, may offer the ability to repay principal (or home equity rate comparison early without penalty. Early payments of part of the principal will reduce the total cost of the loan (total interest paid), and will shorten the amount of home equity rate comparison needed to pay off the loan. Early payoff of the entire loan amount (refinancing) is often done when interest rates drop significantly. Adjustable rate mortgages are sometimes sold to unsophisticated consumers who are unlikely to be able to repay the loan should interest rates rise, which they often do. In the United States, extreme cases are characterized by the Consumer Federation of America as home equity rate comparison loans. Protections against interest rate rises include (a) home equity rate comparison possible initial period with a fixed rate (which gives the borrower a chance to increase his/her annual earnings before payments rise); (b) a maximum (cap) that interest rates can rise in any year (if there is a cap, it must be specified in the loan document); and (c) a maximum (cap) that interest rates can rise over the life of the mortage (this also must be specified in the loan document). Refinancing may be undertaken home equity rate comparison reduce interest costs (by refinancing at a lower rate), to pay off other debts, to |
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