DALLAS 7/1 ARM RATE Just like the Dallas 5/1 ARMs, this Dallas 7/1 arm rate, is a type of mortgage loans that operates between fixed rates mortgages and adjustable mortgages. In this loan, during the first seven years of the loan period, the interest rates are set. The interest rates are a bit lower, but they change by one each year during the remaining years until all the mortgage is completely paid off. The number 7 stands for the fixed interest rate charged during the first seven years, while the number 1 stands for the changing interest rates by one per year until all the loan is repaid.
The interest rate during the first seven years is low because it is fixed. But the interest rate paid each year after the end of the first seven years is tied to the interest index which is based on different factors like economic fluctuations and the market. An interest rate index is used as a measure to determine the interest rate charged by lenders on their products. After the first fixed seven years the interest rate may rise or fall depending on the rate index. If the rate index rises, the interest rate also rises and if the the rate index falls, the interest rate also drops. If it’s not refinanced, one is forced to pay off the mortgage in a period of 30 years. There are various factors that necessitate one to consider this 7/1 Adjustable Rate Mortgage in Dallas which includes; if one is planning to refinance their mortgage or; sell the house before the completion of the first seven years of fixed rate or if you are anticipating for a quick rise in the value of your house. An ARM is a good choice because, due to the low interest rate during the first seven years, one is likely to qualify for a bigger loan. But, what one must not forget is that after the fixed interest rate in the period of the seven years, the payments each month and the interest rates on home loans in Dallas will increase substantially depending on the terms of the loan you have. The disadvantage is that one won’t have peace of mind after the first seven years because the interest rates are unpredictable. The best thing with this Dallas 7/1 Adjustable Rate Mortgage is that the up-front interest rate is lower as compared to that on 30 year fixed mortgage in that in the first seven years the amount you pay each month is lower as compared to the one with a fixed rate throughout the loan period. In Dallas, just like the 5/1 ARM Mortgage, this type of mortgage is also preferred by many borrowers because of the low interest during the first seven years of fixed interest rates thus giving the borrower a chance to make some considerable savings.
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