Adjustable Rate Mortgages
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Adjustable Rate Mortgages
Adjustable-rate loans, also known as variable-rate loans, usually offer a lower initial interest rate than fixed-rate loans. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates. When interest rates rise, generally so do your loan payments; and when interest rates fall, your monthly payments may be lowered.
These type of loans usually offer a lower initial
rate than a fixed rate loan. What you must be
concerned with if you choose this type of loan
is the cap on the loan, in other words, what is
the maximum interest rate this loan could go to
and what would your payments be if that scenario
happens.
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