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What happened to the 30 year fixed mortgage?
Friday, February 08, 2008
Buying a home and having the ability to make the payments sounds simple enough. Up until a few years ago, lenders actually seemed to be concerned about this simple rule. Opening almost any newspaper, one is going to find disturbing trends happening today and it is always caused by breaking this simple rule.
Before you take out a loan it is very important to ask what the highest payment could be after all adjustments and caps have been accounted for. Your mortgage broker should be able to calculate this for you if you can't do it yourself. However, if you can't calculate this yourself, you probably shouldn't do the ARM at all because you should never sign anything that you don't understand.
This is where the fixed rate becomes a viable choice. The rate never changes, therefore the payment never changes.
Posted by Joecavello at 00:03:27