| the first 2 years (this is also done boston mortgage loan quote 3,5,7 year fixed periods), and then the loan becomes a 6 month ARM thereafter, rather than a loan that does only adjust every 2 years. The benefits This loan product has actually lowered the costs of borrowing in the early years of loans, but certainly is a source of continuing refinance business to the Mortgage industry. They let borrowers take advantage of special pricing, by saving money on payments boston mortgage loan quote the borrower's a) salary is rising such as for young professionals or b) boston mortgage loan quote the borrower knows they are going to move up quickly from one home to another. The risks If a borrower is inconsistent in their on time payment history, afflicted by tragedy which causes a credit problem, or keeps insufficient funds in reserve (the payment savings from the lower rate for example), as referenced above, the rates in Hybrid ARMs will certainly rise, and with insufficient credit and income, the borrower may be forced to trade equity boston mortgage loan quote time, and in some markets, not as advantageously as today. Terminology Fully Indexed Rate - The price of the ARM as calculated by adding Index + Margin = Fully boston mortgage loan quote Rate. This is the interest rate your loan would be at without a Start Rate (the introductory special rate for the initial fixed period). This means, your loan would be higher today if it was adjusting, typically, 1-3% higher than the introductory rate. Calculating this is IMPORTANT for ARM buyers, since boston mortgage loan quote helps you predict the future interest rate of your loan. Margin - This refers to the banks profit margin above boston mortgage loan quote value of the financial index. The bank seeks to make a profit above the costs of inflation. The index is a measure of the cost of funds as measured by inflation. Index - A publicly published financial index such as LIBOR (usually 1 month, 6 month or boston mortgage loan quote month), 11th District Cost of Funds Index, MTA, etc. Start Rate - The introductory rate provided to purchasers of ARM loans for the initial fixed interest period. The difference between the "Start Rate" of an |  |
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