ARMs allow you to choose from several payment types each month. These options include a typical payment of principal and interest, interest only payments, and a minimum payment. These loans can be very dangerous if you can not afford the increasing monthly payments in the future.
Interest Rate: The interest rate for these types of mortgages is usually very low at first (1 or 2%), and gradually rises. After five years there is a recalculation period, which could increase your payments.
Payment Changes: The minimum monthly payment increases continuously. Your payments could end up going up drastically, so be very careful.
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