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The market has improved for arm rates


The spread between fixed rate loans and adjustable rate mortgages has increased, explore your options before you refinance or purchase your next home.

The residual effect of the Fed aggressively lowering the Fed Funds rate is that most adjustable rate mortgage loans are now becoming more attractive. The Fed's actions do not directly effect mortgage rates, but they have the ability to greater influence the economic indexes (LIBOR) that most arm's are tied into. This effect is welcome news to home owners who already have an adjustable rate mortgage and are learning that their interest rate will not be skyrocketing up and in some cases may be adjusting down. If you are in the market to purchase or refinance your home you may want to consider looking at the numbers on both fixed rate mortgages as well as adjustable rate mortgages. The difference in the rates is a little over fifty basis points for most lenders, which translates into $1,000 worth of interest on an annual basis. This decision should be influenced by how long you plan to stay in your home, your present home equity position and your earning capacity should your rate and mortgage payment adjust in the future. If you are a first time home buyer, it is not recommended you use this technique to stretch your buying power and most lenders today will qualify you at a higher starting mortgage rate.

5-21-2008 ? LoanNetwork.com





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