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  • Actual for You - Adjustable Rate Mortgages: Five Things You Need to Know

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    If you are a homeowner with an Adjustable Rate Mortgage (ARM), or are considering taking out an adjustable rate mortgage, there are five things you need to be aware of before diving in. Here are five things to know about your ARM.

    Interest Only Mortgages

    Most of the adjustable rate mortgages on the market amortize interest and loan principal at the same time. Interest only mortgages do not pay back the loan principal during the interest only period. Your monthly payments will be significantly lower during the interest only period; however, at the end of the interest only period, which can last anywhere from one year to five years, your monthly payment amount will increase significantly. This can come as a shock to many homeowners that pushed that “interest-only thing” to the back of

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    re of before diving in. Here are five things to know about your ARM.

    Interest Only Mortgages

    Most of the adjustable rate mortgages on the market amortize interest and loan principal at the same time. Interest only mortgages do not pay back the loan principal during the interest only period. Your monthly payments will be significantly lower during the interest only period; however, at the end of the interest only period, which can last anywhere from one year to five years, your monthly payment amount will increase significantly. This can come as a shock to many homeowners that pushed that “interest-only thing” to the back of

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    tize interest and loan principal at the same time. Interest only mortgages do not pay back the loan principal during the interest only period. Your monthly payments will be significantly lower during the interest only period; however, at the end of the interest only period, which can last anywhere from one year to five years, your monthly payment amount will increase significantly. This can come as a shock to many homeowners that pushed that “interest-only thing” to the back of
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    ears, your monthly payment amount will increase significantly. This can come as a shock to many homeowners that pushed that “interest-only thing” to the back of their minds while enjoying the low monthly payment amount. If you have an interest only mortgage you should find out when the interest only period ends as soon as possible; this will help avoid a financial crisis if your monthly budget cannot support the higher payment amount.

    Negative Amortization

    Negative amortization is a dirty word you could slap your loan officer’s face for neglecting to mention. Adjustable rate mortgages, especially interest only and option loans, have the potential to grow with time rather than diminish with your payments. If you have a standard adjustable rate mortgage rather than one of the more risk

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