| The Option ARM Loan: Turning the American Dream into a Nightmare
At first glance, an Option ARM loan can seem like a great opportunity for someone who is looking to purchase a home with the lowest monthly payments possible. An Option ARM mortgage starts out with low "teaser" interest rates that are only good for a month but are extremely appealing. An Option ARM loan also offers the borrower his choice of payment type: a minimum payment, an interest payment, or an amortizing payment. And the minimum payment can be seductively low, offering a borrower with limited cash flow the chance to buy a larger property than he expected to be able to afford. The problem is that if a borrower makes only the minimum payment on his Option ARM mortgage each month, he will quickly find that he is sliding into debt. As the teaser rate expires and the actual interest rate rises, the borrower's minimum payments will not make a dent in the actual loan principal nor the interest that is rapidly accruing.
Refinancing Your Mortgage 101
Editors Note: There are several things you should consider before you refinance your home. Here is an article concerning this subject: Practically everyone has refinanced or thought about it at one point in time. We've seen the dozens of commercials that urge us to do it. With rates at record lows over the past few years, refinancing has helped many borrowers lower their monthly payments. Refinancing your mortgage can be a very hard and confusing experience. When you're making your decision, there are several things to keep in mind. First, even a small rate cut can pay off quickly. Second, if you are planning to stay in your home for at least three to five years, it may make sense to pay "points" (a point equals 1% of the loan amount) and closing costs to get the lowest available rate.
Northern Rock chipper on UK mortgage market
Mortgage lender Northern Rock delivered an upbeat assessment of the UK property sector's prospects for growth in 2007. Releasing a trading statement covering the three months to March 31st, the company predicted that Britain's gross mortgage market would increase from 345 billion in 2006 to at least 360 billion in 2007. Its claims reject suggestions that overall activity in Britain's housing market has been dampened by the Bank of England's three interest rate rises in the five months to January. "Despite these rises the absolute level of interest rates remains low by historical standards and mortgage affordability for the average UK household remains good," the statement argued. It described the buy-to-let market as remaining "firm" and said the strength of home-moving transactions would be maintained "with fundamental support provided by the lack of alternative tenure together with inelastic supply".
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