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Adjustable Rate
Mortgages (ARMs) have become one of America's most popular home
financing tools.
Hybrid
ARMs are the most common of the adjustable rate loans today. Lock in a fixed rate for the
first three, five or seven years and then adjust annually. In a
year, the typical adjustment is often about two points per year,
but it can be much more. Fortunately,
there are limits. Typically, a fully adjusted ARM would have a
ceiling of about 12%. There
are additional options on Adjustable Rate Mortgages, such as
interest-only or even reverse amortization loans, often called Payment Option
Loans. ARMs
such as these allow home buyers to choose how much they want
their monthly payments to be, starting with a payment that does
not even have to cover the monthly interest. These
types of loans carry substantial risk. If you choose an ARM, you must
have a very specific real estate plan, especially if it is a
Payment Option Loan. Let
us help you find a California real estate agent (Click
here).
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