3. What’s the interest rate environment like? When rates are relatively high, ARMs make sense because their lower initial rates allow borrowers to still reap the benefits of homeownership. The chances are fairly good that rates will fall down the road too, meaning borrowers will have a decent chance of getting lower payments even if they don’t refinance. When rates are relatively low, however, fixed-rate mortgages make more sense. After all, 7 percent is a great rate to borrow money at for 30 years! 4. Could you still afford your monthly payment if interest rates rise significantly? On a $100,000, 1-year adjustable-rate mortgage with 2/6 caps, your 5.75 percent ARM could end up at 11.75 percent.
MATT HALICI
l
202.431.1991
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www.mhrealtyplus.com