Homeowners continue to flee to the safety of fixed rate mortgages, according to recent data from housing finance company Freddie Mac. And with interest rates remaining low, borrowers are also getting into shorter-term fixed rate loans. The Freddie Mac survey showed that 95 percent of refinance loans in the second quarter of 2011 were fixed rate mortgages, a major shift from the housing boom days, when adjustable rate mortgages (ARMs) were extremely popular. A full 55 percent of those with hybrid ARMs opted for the security of a fixed rate loan during the same time. What’s more, among ...

According to an article in the New York Times, Adjustable Rate Mortgages (ARMs) are on the rise. ARMs played a big part in the housing market collapse and many are questioning their return to the market. These particular mortgages start out with what some might refer to as a “teaser” interest rate, then later on adjust up. During the housing market boom, as many as 70 percent of homes were mortgaged with an ARM, some adjusting upwards just a few months after closing. The main problem with these mortgages was many people who opted for them bought houses outside their means and when ...

If your ARM is due to adjust this spring, your best move may be to allow it. Don't rush to refinance -- your rate may be adjusting lower. It's because of how adjusted mortgage rates are calculated. First, let's look at the lifecycle of a conventional, adjustable rate mortgage: There's a "starter period" of several years in which the interest rate remains fixed. There's an initial adjustment to rate after the starter period. This is called the "first adjustment". There's a subsequent adjustment until the loan's term expires. The adjustment is usually annual. The starter period will vary ...

For some homeowners, electing to take an adjustable rate mortgage over a fixed rate one can be matter of budgeting. ARMs tend to carry lower mortgage rates and, therefore, lower monthly mortgage payment as compared to a comparable fixed rate loan. Relative to fixed rate mortgages, current ARM pricing is excellent. Freddie Mac's weekly Primary Mortgage Market Survey puts the 5-year ARM mortgage rate lower than the 30-year fixed rate mortgage rate by 1.02 percent. On a $250,000 home loan, a 1.02 differential yields a payment savings of $149 per month. ARMs are not for everyone, of course. ...

When adjustable-rate mortgages are on the verge of adjusting, a common concern among homeowners is that their mortgage rates will adjust higher. Well, this year, because of the math of how ARMs adjust, homeowners in Chicago and around the country are seeing that mortgage rates on ARMs can sometimes adjust lower, too. Adjusting conforming mortgages are adjusting to as low as 3 percent. As a quick review, here's the timeline for most conforming adjustable-rate mortgages: There's a "starter period" in which the interest rate remains fixed. This can range from 1-10 years. There's a rate change ...

If your adjustable rate mortgage is due to adjust this year, don't go rushing to replace it just yet. Your soon-to-adjust mortgage rate may actually go lower. It's related to the math behind the ARM. Conventional, adjustable-rate mortgages share a common life cycle: There's a "starter period" in which the interest rate remains fixed There's an initial adjustment period after the starter period called the "first adjustment" There's a subsequent annual adjustment until the loan's term expires -- usually at Year 30. The starter period will vary from 1 to 10 years, but at the point of first ...