Contact Your Current Provider. Chances are the interest rate with your current credit card provider has been inching up for the better part of the past year. Whereas previously you could have had a 5% rate, the card may now be up to 8, 9, or even 10%. What can you do? Contact your credit card provider and ask for a lower rate. They can tell you no, at the risk of you going elsewhere, or give you a fixed lower rate. If your provider refuses to budge, see if they would consider a lower rate for a certain period of time, let’s say for six or twelve months. The added savings of the temporary lower rate can be beneficial especially if you have a big purchase coming up that you plan on paying off within 6 to 12 months.

Shop Around. Like most Americans, you probably are receiving solicitations in the mail for credit cards. If that is the case, find the plan that works the best for you and apply. Usually, a low introductory rate is offered as well as balance transfer options. If the card has no annual fees and no additional fees are assessed for transferring funds, go with the new company especially if the rate is lower.

Consolidate Your Debt. If your current credit card provider won’t lower their rate and the new card company’s rate isn’t quite as low as you expected, consider obtaining a debt consolidation loan through a lending institution. To get the lowest rate possible you may have to offer up something as security ? for example, the equity in your house ? to obtain the lowest rate. Do this only if you have sufficient equity and can reasonably expect to pay the loan or line of credit off.

The Federal Reserve Bank has raised interest rates ten times since June 2004. Still, lending institutions can and are offering lower rate credit cards and loans. As a savvy consumer you can and will find the best deals out there.

Matthew Keegan is The Article Writer who writes on just about any and every issue imaginable. You can preview samples from his high performing site at http://www.thearticlewriter.com

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Finding the right buy to let mortgage is crucial to your success as a property investor. Unlike other forms of investment, a lot of the money you put into a buy-to-let property is likely to be borrowed. Over the last few years, the buy to let mortgage market has boomed, and borrowing money to invest in this way has become easier than ever. There are a number of different buy to let mortgage products available from fixed rates, discounted variable rates, discounted rates and so on. Different products may be suitable for different investment properties. Finding the cheapest buy to let mortgage may not always be the best option so there are a number of things to consider when deciding which buy to let mortgage is best. For example:

- A lender may offer a very cheap buy to let mortgage product which may carry a very attractive rate for a short while, but look at the small print. If you are then tied in for an extended amount of time at a much higher rate, then you need to calculate whether or not this is the best buy to let mortgage for you in terms of your cashflow as a landlord.

- A fixed rate with no extended tie would enable you to know exactly what your monthly repayments are so that you can calculate your profit/loss for that set fixed term.

- A discounted variable rate can be very attractive when the base rate is in the favour of the landlord and buy to let investors. Monthly repayments will fluctuate according to the decrease/increase in the base rate or LIBOR rate.

- Some of the best buy to let mortgage products may be discounted variable rate products that also offer the option of a droplock facility. A droplock facility on a buy to let mortgage means that for a fee, you can decide to switch to a fixed rate with that same lender.

How Do I Know How Much I can Borrow

This will depend on the lender and the buy to let mortgage products available as this can vary. Some lenders may set minimum salary levels whereas others may need verification that you are an experienced property investor. Others may not be concerned with the level of income providing that the rental income is sufficient. In general, most lenders will calculate the maximum borrowings based on either 125% or 130% cover. This 5% can make the difference as to whether you can borrow the full 85% or less.

The rent that a landlord receives generally has to be either 1.25% or 1.3% more than the interest payment of the mortgage. For example if you were looking to purchase a buy to let property at £100,000 the maximum loan you could achieve is 85%. Assuming an interest rate of 5% this would make the interest only monthly repayment of £355. Therefore the rental income that can be achieved must be £443. This figure being 1.25% times the rental amount.

To get an idea of how much the monthly repayments would be on a buy to let property you are considering then its worth trying an online buy to let mortgage calculator to work out the repayments immediately.

However it is very important that you get the correct guidance with your finance. Questions that are worth considering when finding the best buy to let mortgage:

1. Do they have access to lots of different products in the market place?

2. Do they have the ability to create a long term property development strategy for you?

3. Are they able to secure Exclusive Products?

4. Are they able to arrange mortgages within 10 working days?

Most lenders will offer a maximum loan of 85% against a buy to let property requiring you to fund at least a 15% deposit. But this does depend on the rental income that can be achieved from the investment property. The buy to let mortgage industry is very competitive with new products being launched on a very regular basis so it is worth keeping an eye on the best deals around.

Some brokers may charge a brokerage fee up to 2% to arrange the finance for you but don’t let this put you off because if they do have the ability to secure exclusive products for you, it could be very beneficial to your cashflow as a landlord. Plus, if they are able to reach formal mortgage offer stage in a very short space of time, this could result in you being able to secure property at very competitive prices if you have the ability to tell the vendor that you can have the deal completed within a matter of a few weeks.

Buy to Let Mortgage Types

Variable rate buy to let mortgages

This is the lender’s own mortgage rate and one that is subject to change whenever the lender chooses which is at the same time of base rate changes. This means that if you are on a lenders standard variable rate buy to let mortgage product then your monthly repayments will increase or decrease accordingly although they very rarely pass on the full percentage reduction to the client. This type of product does also allow the lender to change the rate even if there is no change in the Bank of England base rate. So if you are looking for something a bit more palatable why not look at your other options.

Discount buy to let mortgages

For a set period, the lender offers a reduction on its SVR (standard variable rate). Let’s say, it might offer a discount of 1.5 per cent over three years. However much the SVR (standard variable rate) increases or decreases during the discount period, you always pay a rate 1.5 per cent lower.

Stepped Discount buy to let mortgages

Its also worth considering stepped discount buy to let mortgages, where the level of the discount reduces after a set period. For example, you may be offered a 1.5 per cent discount for a year, followed by a 0.75% per cent discount for the second year.

Fixed-rate buy to let mortgages

Regardless of the (SVR) standard variable or changes in the base rate, this kind of buy to let mortgage offers a fixed interest rate for a set period. The monthly mortgage repayments will remain the same giving the property investor the knowledge of what their monthly outgoings will be for a set term.

Capped-rate buy to let mortgages

The capped-rate buy to let mortgage offers a limit as to how high the interest rate can go. The rate you pay can move up and down below that level but never go beyond it. Your payments would reduce if there were any base rate decreases.

Drop-lock buy to let mortgages

This is a feature that is included in some buy to let discounted mortgages. Initially you decide to opt for a discounted product but for a small fee you have the option to drop into one of that lender’s fixed rate products. At which time you would then be bound by the terms of the new fixed rate product.

Tracker buy to let mortgages

Tracker products can be a good option for buy to let investors. Tracker products offer a margin over the base rate for certain periods of time. Some will offer a buy to let tracker product which tracks the base rate plus a margin for a few years whereas recently there are more products coming on the market where they will track the base rate for the life of the loan. Providing it is a low enough margin over the base rate and the base rate remains at a comfortable level, this can be particularly cost effective to a buy to let landlord as it can avoid the necessity for regular refinancing and the costs involved in the exercise.

Why Not Learn more about buy to let and find out how you can start your buy to let property portfolio.

Jennifer Tweed is the founder of buytolet4sale.com, one of the UK’s first property portals dedicated to all types of investment property for sale and everything you should need for your sale and purchase. Learn more about buy to let

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Before beginning the research process, consider and decide how you will use your new credit card. Will you be using the card for everyday purchases, or will you be taking an exotic vacation? Do you plan to pay the balance in full each month, or do you prefer to make monthly payments? Since APRs (annual percentage rates) vary for each card and respective payment plan, it’s important to make these types of decisions before the credit card selection and application process.

Obtaining credit is not free, but can be economical and less costly if you understand the finance charges (the cost you pay for using a credit card). Grace periods may help reduce certain finance charges, depending on the individual credit card company offer. A grace period is the number of days you are given to pay your credit card balance in full before you are charged a finance charge. In most cases, finance charges are applied to new purchases only. (Cash advance finance charges are usually imposed immediately following the advance.)

Familiarize yourself with the annual percentage rate. An annual percentage rate represents the interest rate associated with using your credit card for purchases and cash advances. The APR is often a determining factor for many consumers when selecting and applying for a credit card. Credit card companies may vary their APRs, offering a different rate for purchases, cash advances, introductory periods and penalties. Traditionally, purchases carry the lowest APR. An exception may be an introductory APR for new purchases or balance transfers that may be offered at 0% for qualified applicants.

Many credit card companies competing for your business may offer a lower introductory APR of 0% for a specified period, for example, six months. At the end of this specified period, the APR will change to a pre-determined APR. (This information will be included in the credit card offer.) Therefore, it’s very important to understand the APR following the introductory rate period, particularly if you will be using the card for large purchases and / or balance transfers. Also look for companies offering 0% interest on balance transfers with no time limit. Cash advances usually carry a slightly higher APR than purchases, but will vary for each credit card company.

An annual fee is another cost associated with using a credit card. Many think of annual fees in this way, the greater the APR, the lesser the annual fee. While this may be true in some cases, these fees are typically charged annually and usually will be subject to finance charges. Some special credit card offers, such as unsecured or unlimited credit card types and lines, may impose a higher annual fee.

In addition to a possible annual fee, many credit card companies impose charges through other fees such as late payment penalties, over limit fees and cash advance fees.

With the growing competition amongst credit card providers, new plans such as rewards and points programs are offered as incentives. These programs may offer earned ‘points’ or privileges for consumer items, travel (vacations and frequent flier miles) and other premium services, but oftentimes impose an enrollment participation fee in addition to any annual credit card fee. If you are a frequent traveler, these special programs and incentives may appeal to your taste.

When reviewing each credit card offer, look for the specific information outlined here to best determine the most appropriate card type and plan for your needs. You may elect to use a comparison chart of your own when considering credit card programs to more carefully select the best offer. Using the categories listed above (APR, finance charge, grace period, annual fee, etc.) create a left-hand column containing specific information about each category. Then, create a column for each credit card offer you are considering. This method will afford you a side-by-side, line item comparison to assist you in making a final decision.

Do you want a new credit card but can’t choose? Don’t panic! abc-of-credit-cards.com gives you all the basic information you need to know before applying for a credit card. For more info visit this credit cards website.

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What Are The Advantages?

Loans for personal purposes are useful for borrowers who don’t have assets to offer as collateral (such as a house) but have a need to borrow money. When this type of loan is used to consolidate debt, for example, the typical result is a reduction in interest being paid plus the convenience of making a single payment to one lender.

What Are The Disadvantages?

Because it is unsecured, this type of loan usually comes with a higher interest rate than other types of borrowing. The lender is taking a greater risk by lending without the security of collateral, so they charge the borrower more to help offset the risk.

Additionally, it often comes with restrictions on how you can spend the money you receive, and the amount you can borrow is usually less than with a secured loan. Again, the bank is taking more of a risk by underwriting an unsecured loan so they want to make sure the money is used for the purpose stated in the loan application.

What If I Have A Poor Credit Rating?

Your credit rating will be a consideration for the lender. The combination of a poor credit history and an unsecured loan is unattractive to many lenders, so if you’re in this situation you will likely have to work a little harder to get a loan.

If your purpose for taking out a loan is debt consolidation, though, some lenders are more willing to consider your application because your intent is to reduce debt and get your finances back in order. When in doubt, talk to a loan representative over the phone or in person to discuss your options.

Where Can I Find A Lender?

There is no shortage of lenders who make unsecured loans so you have many resources available to you. If you already have a lending relationship established with your bank or another institution, this is a good place to start. Many lenders are more willing to underwrite such a loan for a customer who has already demonstrated a responsible and timely payment history.

The internet is also a rich source of prospective lenders. Whatever your personal situation, there is probably a lender somewhere out there who specializes in borrowers such as yourself. Make sure you fully understand the "fine print" of their loan policies and expect to pay a higher interest rate if the lender regards you as a higher risk borrower.

For many borrowers, an unsecured loan is a good choice for their specific circumstances. Whether it’s debt consolidation, paying for a wedding or some other purpose, if you’re considering personal loans it’s important to check out multiple lenders and look for a lending program that meets your needs.

This article may be freely distributed providing no alterations are made to the text and the link remains intact.

Copyright © http://www.4a-loan.co.uk - All rights reserved.

For Personal Loans | Secured Loans Please visit us at http://www.4a-loan.co.uk

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The main advantage to a fixed rate mortgage is stability. Since the interest rate remains the same over the entire course of the loan, your monthly payment is predictable. You can count on your monthly mortgage payment to be the same amount each month. On the minus side, because the lending institution gives up the chance to raise interest rates if the general interest rates rise, the interest on a fixed rate mortgage is likely to be higher than that of an adjustable rate mortgage.

A fixed rate mortgage loan makes the most sense for those that are going to settle into their home for many years. While the initial payments may be larger than with an adjustable rate mortgage, stretching the payments over a longer period of time can minimize the effect on your budget.

An adjustable rate is one that is adjusted periodically to take into account the rise or fall of standard interest rates. Generally, the adjustable term is annual - in other words, once a year the lending company has the right to adjust the interest rate on your mortgage in accordance with a chosen index. While adjustable rate mortgages make the most sense in a situation where interest rates are dropping, though it’s dangerous to count on a continued drop in interest rates.

Lenders often offer adjustable rate mortgages with a very low first year ‘teaser’ interest rate. After the first year, though, the interest rate on your mortgage can increase by leaps and bounds. Even so, there are limits to how much an adjustable rate can actually adjust. This is dependent on the index chosen and the terms of the loan to which you agree. You may accept a loan with a 2.3% one year adjustable rate, for instance, that becomes a 4.1% adjustable rate mortgage on the first adjustment period.

Finally, there’s a new kind of loan in town. A hybrid between adjustable rate mortgages and fixed rate mortgages, they’re known as ‘delayed adjustable’ mortgages. Essentially, you lock in a fixed rate of interest for a number of years - say 3 or 7 or 10. At the end of that period, the loan becomes a 1 year adjustable rate mortgage according to terms set out in the agreement you sign with the mortgage or financial institution.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.

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Why Would They Do That?

Offers of payment holidays typically have a very high acceptance rate. People think it’s great that they can take a month off from the stress of paying back debt. What they don’t usually realise is that these ‘holidays’ aren’t a present at all - they’re a great money-spinner for the credit card company. For the company, it’s a win-win situation: they get to make big profits just by making their poorer customers happy.

How Can Letting Me Off Paying Earn Them Money?

Well, that’s where the trick comes in. If you read the small print, you’ll find that the payment holiday> isn’t interest free! You’re still being charged interest - and since you’re not paying anything back that month, the interest will be there next month for you to pay interest on (compound interest, you see).

That might feel a little hard to grasp, so here’s an example. Let’s say you were paying back $1000 of debt at 1.5% per month (about 19.5% per year). Your minimum payment each month is 2% (26.82% per year).

If you pay the minimum for all 12 months of the year, then you will pay back $233.51, and owe $941.62 at the end of the year. Your debt has been reduced by $58.38, and you’ve lost $175.13 in interest.

With the payment holiday, though, you pay 2% per month for only 11 months (so you pay 24.3% back on the debt over the year). That’s $217.80, and you’d owe $960.55 at the end of the year. Overall, you’ve paid $37.86 for your payment holiday from a payment of about $20. In other words, your month off cost you almost two months of payments.

Don’t worry if you don’t understand all the maths involved here - it’s been deliberately designed by mathematicians and marketers to be as confusing as possible, to stop you working out what a bad deal you’re getting. After all, if you haven’t read this, would you really ever turn down a month off paying your bills? Just remember: don’t fall for it. The more you owe, the more that ‘holiday’ will cost you. Wouldn’t you rather take your money and go on a real holiday, instead of spending it all on repaying credit card debt?

If It Sounds Too Good to Be True?

In all things in life, remember that no-one gives you anything for nothing - least of all credit card companies. Anytime they offer you anything, it’s because they’re going to make a profit on it. If you can’t see where their profit is coming from, be suspicious - it’s probably all a big scam that’s going to cost you money, even if you don’t realise it.

Ken Austin is the webmaster at Debt Consolidation Information and Credit Card Debt Relief

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1. Are you planning to stay put in the area?

The first question to ask yourself is how long you are planning to stay in your new home. If the answer is ‘less than two years’, then it may be to your advantage to continue renting for a while longer - and use the time to build up your credit more strongly.

If, on the other hand, you’re planning to stay in one residence for more than a few years, buying makes more sense. Owning a home puts down roots, and makes you a more stable member of the community. It also makes more financial sense to buy if you’re going to hold onto the property for more than two years. Unless you ‘flip’ properties - buy cheap, make repairs and sell high - it’s nearly impossible to recover your investment if you own a house for less than two years.

2. How’s your credit?

If you’ve never checked your credit score or read your credit report, this is the time to do it. The higher your credit score, the easier it will be for you to qualify for a mortgage, and the better the terms of the mortgage for which you’ll qualify.

If you find problems in your credit score, you can take steps to fix them before you apply for a mortgage. This includes erroneous information on your credit report or extenuating circumstances that may have led to a missed payment or two. In many cases, minor credit problems can be repaired with no more than a few months of on-time payments.

3. How much house can you afford?

Figuring out how much of a mortgage you can take on can seem almost like some sort of voodoo. You know how much you can afford to pay per month for a mortgage payment - but how does that translate into how much you can afford to pay for a house? The easiest way to work it out is to use an online mortgage calculator. Many web sites that offer credit and loan information have mortgage calculators available that will work in either direction - plug in the asking price of a house and your expected interest rate and the amount of your down payment, and the calculator will tell you an estimated monthly payment. Or plug in your income and expenses, the amount of the monthly payment you can make and the length of time you want to repay it - and the calculator will tell you the most expensive house you can comfortably buy.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.

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There are many loan packages available for people with no money to put down on the home or for closing costs. The home loan industry has undergone revolutionary changes over the last ten to twenty years. No longer is it true that you need to put down 10% and have enough money for closing costs in order to buy a home. The simple fact of the matter is that there are home loan packages that can get you in a home with no money down, or very little.

Let us first examine the down payment. A down payment is the amount of money towards the purchase price that you pay out of your own pocket. Typically people put between 5% and 10% down on a home when they sign a contract. This is not a legal requirement, but rather an established tradition. If you find a buyer who does not require a down payment on contract and you are approved for a loan with 100% financing, then you need not pay anything out of pocket.

But, just how do you do this? The first thing you need to do is meet with a mortgage professional and get that aspect of the process completed. You will want to have a pre-approval or even a mortgage commitment with contingencies based on home value and selling price. Armed with this, you will be in a better negotiating position to get a seller to agree to sell their home with no money down. Your lender also may be able to refer you to real estate agents that can help you find a home that you can purchase with no money down. Again, there are no legal obligations to put money down, it is rather just custom and tradition. With the right mortgage lender and real estate agent you will be able to purchase a home without any money out of pocket.

Aside from the down payment you have likely been told that you will not be able to purchase a home without money for closing costs. Closing costs can be anywhere from a couple of thousand dollars to tens of thousands of dollars depending on the value of the home, the size of the mortgage and other variables. You do not necessarily have to pay closing costs out of your pocket.

There are loan packages available for people that are not able to pay closing costs out of their own pocket. What these packages basically do is inflate the purchase price of the house by the amount of the closing costs and then have the seller pay the closing costs for the buyer with those extra funds. So, for example, if the purchase price of the house is $100,000 and closing costs were calculated to be $4,500 the contract would read that the sale price is $104,500 and would include language that the seller is to pay $4,500 worth of closing costs for the buyer. The seller still gets the $100,000 for the home and the additional amount that was financed goes towards the purchasers closing costs.

Different states have different rules on how the language must read and what closing costs can and cannot be paid by the seller. You will want to make sure you have a full understanding of this process and how this will work under you specific circumstances.

Believe it or not, there are loan packages available that combine both of these examples - no money down and no money for closing costs. The property will need to appraise at a specified amount in order to qualify but the key is understanding that this very much can be done. It can turn a renter into a homeowner with nothing out of pocket and perhaps even a reduced monthly payment. Mortgage payments can be at or below rent payments depending on the home you pick.

Today’s home loan industry is competitive. There are packages available for most people no matter what credit history they have or what funds they have available for the down payment and/or closing costs. Rather than deny your own mortgage application, speak to a mortgage professional to determine if you can begin realizing your dream of homeownership and a brighter financial future.

Ethan Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.homeloanave.com

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? Pre-approved credit card offers ? they complete them and have the card sent to them at a different address ? Loan applications- they complete the application and have the money sent to a phony address. ? Bank statements- they then have your bank account number and can print counterfeit checks

Becky Palmer, a Consumer Credit Counselor, knew of someone who had their wallet stolen, and they used the credit card to buy a $5000.00 gift card at Wal mart, this then become very hard to trace.

People that are more at risk are senior citizens, people with disabilities and immigrants, but remember that everyone, including children are at risk. Senior citizens are home all day; they might get a phone call from a fake charity asking for money. Immigrants are desperate for credit, they may have just arrived in the US and know they need credit to do anything and are not aware of these scams. People with disabilities are home, and may become a victim of phone or online fraud. There have also been cases of home care providers taking advantage of their clients. Remember, it is not always a stranger that can steal someone’s identity. Did you know children can be victims of identity theft? This could affect or ruin their credit before they even are able to build up credit for themselves. There have been cases of parents using a child’s name for their electric bill or phone bill when they have bad credit or owe the utility company money. Thieves will obtain the social security number of these children then use that number to get credit cards and rack up purchases.

Some of these scammers will call you and say they are from a fictitious charity. They will offer to have your contribution automatically deducted from your checking account and will ask for your routing number, bank name, and account number. DO NOT GIVE OUT THIS INFORMATION! If you pick up a call from a telemarketer, ask them the following questions and if they are a fraud, they will hang up quickly.

? Who do you work for? They will try to give you the name of the fake charity here, so ask them "who pays your salary?"

? How much of my donation (percentage) goes to this charity and what is the rest of the money used for?" If they are for real, they can easily give you this information.

? What is the charity’s full name, address and phone number?

Once you have the above information you can check with the state attorney generals’ office or secretary of state to see if the charity is registered. Also check the charity’s rating thru the Better Business Bureau at www.give.org.

Michelle Dunn has over 17 years experience in credit and debt collection. She is the founder of Never Dunn Publishing, LLC, is a writer, consultant and the Editorial Advisor for Eli Financial Debt Collection Compliance Alert Newsletter. Michelle started M.A.D. Collection Agency and ran is successfully for 7 years. She owns and runs Credit & Collections.com a free online community for credit and business professionals.

She has written 5 books in her Collecting Money Series and is currently writing a book for the Streetwise Series, part of the Adams Media Corporation. For more information on Michelle’s services or to order any of her books please email her at michelle@michelledunn.com or visit http://www.michelledunn.com & http://www.credit-and-collections.com

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Fixed Rate Mortgage

Two major components that are needed to compare fixed rate mortgages are the interest rate and the points. Points are fees paid to the lender at the beginning of the mortgage period. They are based on a percentage of the loan. So, one point equals one percent of the loan amount. Therefore, a $100,000 mortgage with 1.5 points would cost $1,500.

One lender may offer a lower interest rate than another but the points may be higher resulting in a less attractive loan. The important consideration here is the length of time you plan to hold the mortgage. The longer you plan to keep the mortgage, a higher point with a lower interest rate makes more sense. And, the less time you plan to remain in a home you may be more likely to benefit from low or no points with a higher interest rate.

In addition, be sure to ask your lender the total of all fees involved. Lenders can tack on various fees that can add up in a hurry.

Some common fees are:

* application fee

* credit report

* property appraisal

* title insurance

* escrow fees

Request an itemized list of all fees in writing so you can compare mortgages fairly.

Adjustable Rate Mortgage

Selecting the best adjustable rate mortgage (ARM) is basically impossible because there are some unknowns. However, you can look at a few of the loan factors and depending on your situation make a decision you can live with.

The interest rate that an adjustable rate mortgage starts off with is called the start rate. This rate is the least important consideration when looking at ARM’s because it will change. The start rate is often used as a teaser rate to make you think that the loan has good terms.

The more important factors to consider when deciding on an ARM is a formula of index and margin equals the interest rate. The index is what the lender uses to calculate your specific interest rate. Indexes can differ in how quickly they respond to interest rate fluctuations. Some common indexes used are Treasury bills (T-bills) and Certificates of Deposit (CD). The margin is a fixed figure which is added to the index to get the interest rate. Margins are typically about 2.5 percent.

Another important consideration is the frequency in which the mortgage rate is recalculated. Some ARMs adjust monthly, while others only adjust every 6 or 12 months.

Also, rate caps are used to limit the amount the rate can change within an adjustment period. An adjustable rate mortgage that adjusts every 12 months may be limited to a 1-2 percent change up or down. There should also be a lifetime rate cap to limit the rate change over the life of the loan which is usually around 5-6 percent higher than the start rate.

Before accepting an ARM you should figure out the payment at the highest rate allowed to see if you can handle the worst case payment.

Lastly, other lender fees should be considered with a request for a written total fees statement.

Fixed vs. ARM Payments

A fixed rate mortgage is just that, a fixed interest rate for the life of the loan. The payment will always stay the same without fluctuation, however, the risk is that if rates drop significantly you may be stuck with a higher rate.

ARM interest rates can fluctuate many times over the life of the loan, thereby, changing your monthly payment amount. ARMs offer potential interest savings because the start rate is typically lower than a fixed rate. Also, if rates drop or stay the same there will be a continued savings compared to a fixed loan. But, if rates rise an ARM will cost more than the fixed rate loan.

Choosing a Fixed-Rate vs. an Adjustable-Rate Mortgage

First, consider the risk you can take with the monthly payment amount changing. Do you have savings? Or are you budgeted to the max without any emergency savings? If you can’t afford to pay your ARM at the highest payment amount you should steer clear of this type of loan.

Also, consider how long you plan to have the mortgage. Generally, ARMs are better for a mortgage of 5-7 years. If you plan to keep your mortgage for the long-term a fixed-rate mortgage may be the better, less stressful choice.

Lastly, if the thought of having an adjustable rate mortgage stresses you out…don’t do it! The stress is never worth the potential savings. And, if rates drop significantly you may have the option to refinance to a lower rate anyway.

Jill Kane helps you find loans for all of your financial needs at Low Rate Loans

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