Mortgage Options - Fixed Mortgage or Adjustable Rate Mortgage? Single Moms Beware!

As a licensed mortgage broker, this subject is very important to me. I have seen so many people lose their homes by entering into an agreement with a lender and NOT understanding what they are signing. Understanding home loans is not easy. It took me years to fully understand all the twists and turns and I have a license!

There are more times than not when an adjustable rate mortgage is sold as "fixed" mortgage. When in reality it is only fixed for 2 years. Adjustable rate mortgages are usually fixed at the original rate for 2 or 3 years after that they adjust according to the current market. The client walks out of their closing thinking they have just made the best move of their life and in 2 years the "fixed" mortgage they signed for adjusts for the first time. This is horrifying for most people. I will be the first to fault the brokers, as I believe sometimes they forget that they have an obligation to fully explain the loan in simple to understand terms.

If you have any questions concerning your current mortgage or if you think you may have been put on an adjustable rate mortgage and it has not been explained to you properly I will be happy to take a look at it for you and answer any questions you have. Please email me at Darlene@TheLawsonGroupLLC.com or sign up for my weekly newsletter and leave me a quick note;-)

In the world of mortgages, you need to be armed with the facts. Not knowing what you are getting into when you sign on the dotted line could end up hurting. In the case of Adjustable Rate Mortgage, this is especially the case. Not only are they extremely complicated, but when you're not sure what they can do to you, they can be a painful learning experience.

The basic appeal of an ARM mortgage is that you don't have to make large payments in the beginning. These are the loans you may have seen on website banners advertising $200,000 loans for only $500 a month. This does sound good when money is tight and you want to conserve the bills you have. But in actuality, you will still be borrowing a certain amount of money that needs to be paid off. And while the bills are low in the beginning, they will begin to increase over the duration of your loan period.

Another thing to consider with option ARM mortgages is that the interest rates can soar depending on the market and the terms of your loan. Though you might be only paying $500 a month, your loan amount may be increasing without you even realizing it. And once you're out of that initial low payment period, you may need to double or even triple the amount you are paying every month.

So, the question becomes - are the ARM mortgages good for anyone? If you don't have a lot of money now, but you can be certain that you will in the future, this might be a good option for you. But if you're not going to keep up with your current low payments and aren't adding any additional money that you could to the payment plan, you might be setting yourself up for a financial disaster.

If you would like a free no obligation mortgage analysis. Please email me at Darlene@TheLawsonGroupLLC.com