ARMs . . . back then, very cool. Now, not so cool.

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A few years ago, ARMs, or adjustable rate mortgages, became increasingly popular.  With most borrowers assuming that they wouldn’t live in the same house for more than 7 or 10 years, lots of people took advantage of lower mortgage rates and interest-only payments by financing their homes on a adjustable rate mortgage, or ARM.  Now, as fixed mortgages rates dip lower and lower, the idea of an adjustable rate mortgage (ARM) may not seem like the best plan.  You know, a lot of things in life seem like a really good idea at the time . . . and then, we look back and realize that they weren’t as great as we thought.  I wonder if Sylvester Stallone has ever had that feeling . . . hmmmmm. 

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You get the idea. 

And, if you don’t get the idea, kudos to you, you’re probably better off for not having spent your time watching Lincoln Hawk (a struggling trucker trying to keep his life together and win his son back by entering a national arm-wrestling contest).  And, you probably also did NOT spend a lot of time challenging your older brother to arm wrestling bouts, turning your hat around backwards and using the secret “over-the-top” Hawk grip.

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My point?

If you have an adjustable rate mortgage (even if the rate is REALLY low), now may be the best time to take advantage of locking-in on a fantastically low fixed rate mortgage.  In the past, I advised my clients to consider refinancing their ARM only if it was set to adjust in the next 12 months.  Since Fall 2007, my advice has been broadened to anyone with an adjustable rate mortgage set to adjust in the next 24 months.  And, since Monday (and since mortgage rates dipped below 5.5%), my advice is this . . . if you have an ARM, and you plan on staying in your home past the fixed-term remaining on your ARM, you should take advantage of rates and refinance.

And if you don’t . . . (big movie-announcer voice) you may one day find yourself “driving headlong towards the biggest fight of [your] life,” “because some fight for money . . . some fight for glory . . . he’s fighting for his son’s love.”  What??!!!??

Ok, if you don’t take advantage of rates and refinance . . . (no big movie-announcer voice) you could miss out on a great fixed-rate mortgage.

Jeffrey Pinkerton is a Mortgage Consultant and President of Hillside Lending, LLC and writer for “the Mortgage Blog.”  Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing.  For more information about available programs and interest rates, please visit www.hillsidelending.com.

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