WHEN MORTGAGE RATES were at record lows not so long ago, adjustable-rate mortgages (ARMs) were sidelined in favor of the more stable 15- and 30-year fixed-rate mortgage. But as rates rise, ARMs—which typically have lower initial rates than their fixed-rate cousins—have gained popularity.
“The rate on the fixed-rate mortgage has gone up much faster than the rate on the adjustable-rate mortgage,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association. Over the past year through early December, the 30-year fixed-rate loan has more than doubled, from 3.11% to 6.49%, according to Freddie Mac. Meanwhile, the average initial rate of a popular 5/1 ARM was 5.48%.
The share of home buyers applying for an ARM has almost quadrupled since the start of 2022, coming close to 11% of all applications for the week ending November 11, according to the MBA. In October, ARMs accounted for nearly 13% of mortgage applications, the highest share since March 2008.
How ARMs work. As the name implies, most ARMs adjust after the initial lower-rate period ends. Once the adjustment period kicks in, the interest rate changes occur at regular intervals, such as annually or every six months, until the end of the loan term. The new rate is based on a pre-determined index and margin and, depending on market conditions, can make your monthly payment higher or lower than what you paid previously.
هذه القصة مأخوذة من طبعة February 2023 من Kiplinger's Personal Finance.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة February 2023 من Kiplinger's Personal Finance.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
My Top 30 Index: An Update
A year ago, I put together what I called \"my own reinvention\" of the Dow Jones industrial average, the popular 142-year-old large-cap index.
Balance Your Risk and Reward
These new ETFs let you cut stock market losses. But you'll sacrifice some gains.
IS A HYBRID CAR RIGHT FOR YOU?
Hybrids offer a fuel-saving option for drivers who have reservations about all-electric vehicles. But there are trade-offs.
HOW TO REACH YOUR INVESTING GOALS
Patience helped these four investors make their portfolios work for them.
WHERE TO INVEST NOW
Expect a lot of midyear churn, with a rally toward the end of 2024.
TIPS FOR FINANCING A HOME PROJECT
I recently had a call with a client who was looking to fund the construction of a swimming pool at his house.
MORE WOMEN THAN EVER ARE STARTING BUSINESSES
Retail and travel businesses, along with health, beauty and fitness, are popular with women entrepreneurs.
Finding Home Health Care
It’s important to hire a caregiver you trust.
UNDERSTANDING BOND FUND YIELDS
What's a 30-day SEC yield? A trailing 12-month yield? A yield to maturity? We explain what each measure says about an income fund.
ANSWERS TO YOUR QUESTIONS ON STUDENT LOANS
If you have federal student loans, you may benefit from new government policies. Here's what you need to know.