Size of the Turkish Mortgage Market

The Turkish mortgage market has shown promising growth in the last few years. While the existing mortgage loans had a share of only 0.6 percent of the GDP in 2004, the share jumped to 2.6 percent in 2005, and then to 4 percent in 2006. Currently the existing mortgage loans are about 31 billion YTL, which is about 5 percent of GDP.

These statistics clearly show that mortgage market has been growing faster than the rest of the economy. As described below we expect that it will likely to continue this trend in the near future too. The rapid growth has been fueled by primarily by economic factors such as falling interest rates and improving economic stability but also by characteristic factors for Turkey such as solid population growth and strong ownership culture.

For 2008 we anticipate that the fast growth in the mortgage market will continue amid the continued decrease in the interest rates. Assuming that inflation will move towards targeted 4 percent and Turkey’s macroeconomic indicators will not get weaker in 2008, we expect that the interest rates will continue to fall in 2008. In addition, when the secondary mortgage market starts, capital markets will start to share the risk of mortgages and the cost of getting a mortgage loan will likely decrease further.

Based on these conjectures, we anticipate that the annualized growth in the mortgage market in the beginning of 2008 will average about 40 percent and then will accelerate to about 50 percent as long run interest rates decrease to 1 percent in the second half of 2008. Based on these predictions, we find that by the end of 2008, the mortgage loans will be about 47 billion YTL, making about 6.5 percent of the GDP then.

Looking even further, based on the assumption of continued decrease in the interest rates, and recently announced plan of inflation falling to 4 percent as planned in 2008, 2009, and 2010, our models predict that by end of 2012 the mortgage loans can be as large as 15 to 18 percent of the GDP.

Let’s also note that we believe that there two major risks to our forecasts for 2008: The first is a turmoil in the global economy and especially world’s financial markets driven by a recession in the USA. The second one is a domestic financial crisis probably caused by a current account imbalance. In either case, it would be very hard to predict the growth of the mortgage market for 2008.

Predictions on the Structure of the Mortgage Market

We believe that in 2008, the Turkish mortgage market structure will start to see several important changes:

1) Increase in refinance activity: Currently the majority of the new mortgage agreements are issuances of new mortgages and refinancing of mortgages does not take a large share in the market, however, we believe that starting in 2008, the refinancing will start to take a significant share in the market amid the decreasing interest rates. If the interest rates continue to decrease, the share of refinance activity can be even more than half of the total mortgage applications in a very short time.

2) Variable rate mortgages: Currently 99.9 percent of all mortgages are fixed rate mortgages. This is not surprising as variable rate instruments are very new in Turkey and the risk and benefits of these new instruments are not very understood yet. In addition, the very large movements in the interest rates and exchange rates in early 2000s and accompanying bankruptcies are still fresh in the memories of Turkish people and created a crisis-awaiting culture. However, we believe that the advantages of the variable rate mortgages will start to draw more people and its share will start to increase slowly in 2008. But for this, banks should reduce the interest rates of the variable rate mortgages, which did not happen so far because of the lack of competition in this type of products. We anticipate that as the competition among mortgage lenders increase, we will start to see more favorable variable rate mortgage instruments soon.

3) Lending institutions: Currently all mortgages are offered by banks; however, in 2008 consumer funding companies that are allowed to invest in capital markets to create funds for the home loans will start to offer mortgages. These new lenders will start to change the market structure as they may be less structured and flexible than the banks.

4) Secondary mortgage market: Secondary mortgage market is expected to start in 2008. We expect that at the beginning, the secondary market will be experimental without causing a significant immediate change in the interest rates, however, as the market matures, it will be one of the most important pillars of the mortgage market. It is hard to predict the role of the secondary market right now, but it is worth noting that secondary mortgage markets tend to play an important role in a few years after it started. For example, in the USA, mortgages trades in the secondary market started in 1970, and in 1972 it represented 4 percent of the total mortgage debt, the share increased to 9 percent in 1979, and then to 16 percent in 1982. In order to see comparable growth in the Turkish secondary mortgage market, corporations such as Freddie Mac should be founded, otherwise, the growth will be much slower.

The benefits of the securitization are reduced interest rates for the borrower, increase in the credit availability, liquidity increase for the lenders, and increased efficiency in the mortgage markets.

When mortgage markets merge with the capital markets through securitized mortgage loans, the market interest rates will quickly impact the mortgage interest rates.

Briefly, we expect that in 2008, growth of the mortgage market will continue its pace and in addition it will continue going through important structural changes that will cause even more growth in the coming years.



Sell and Rent Back

In order for your website to get a good search engine ranking you need to have people linking to you. There are several ways to do this that I will explain and this will help your home based internet business thrive with hits and sales

1. One of the best ways to raise your ranking by the search engines is by offering content that people need and they will naturally link to your site because of the information you have provided. Most people are looking for information, tips, and tricks that they can use. For example this article, if you did not already know, this article will give you ideas on how to increase your rankings and get more traffic to your home based internet business site.

2. Next big tip is to write articles about your topic of interest. People like new information so do search engines. Include a link to your site in every article you write. Not only is this an inbound link it will help raise your ranking. There are several places to submit articles to on the web. Do a google search and you will find several. Some of the most popular include this site. plus Hello article and Article Dashboard. Make sure you include a link to your site at the bottom of each article you submit. Then for the anchor words, use your keywords that you are trying to get a good ranking for. Example would be: "Profitable Home Based Internet Business".

3. Exchange links with other site owners or sign up at a reputable link exchange company - try and find sites with relevant information to your site, for example "profitable home based internet business". Whatever you do, DO NOT join a link farm. The search engines will penalize you for this.

4. Research your competitors links. Find sites like yours and see what sites link to them . For example if your keyword is "profitable home based internet business" you might want to go to google.com and type in that keyword. When the results come up check out which sites are like yours. You can go to google research and find what links to the url you are interested in.

5. Internal Linking strategy will also help you. Search engines like internal linking. For example if you have a five page website pages, you should have links to each page. In addition, if you have more than one website you should definitely link to them on each page.



Quick Property Sale

Selling house to rent back’ simply means that we shall buy the property from you and then rent it back to you. You would not have to vacate your existing accommodation and at the same time, raise money to meet your existing financial crunches. You could save the much-needed extra money and purchase a new house and even buy back your old house from us.

The rental potential depends on various factors including location and condition of your home, proximity to key locations in the city, etc. We are an honest alternative to real estate agents who torch you and give you no lucrative deal in return. We have expertise and knowledge required to sustain ourselves as well as satisfy our customers. While we evaluate the worth of your house, market value is just one of the factors. Our experts personally visit the site and develop a model that attributes the specifications of the house with its equivalent pricing.

If you are looking out for a hassle-free transaction regarding selling and renting back house, you have just found what you were looking for. Contact our team, and we shall tailor a solution to specifically match your requirements. You are just one click away from a NO OBLIGATION offer.

 



Real Estate Professionals

We encourage our kids to plan for their future, but we seldom include buying a first home sooner than average as a path to building that future. Let them know buying a home is easier than they think.

Most of the people who read this column are not first time homebuyers. The fact of the matter is many of you that are first time homebuyers and reading this article are relatively mature individuals who are fighting off your commitment fears of being tied to a mortgage. But there is a huge segment of the population that could buy their first home, yet it doesn’t occur to them to do so. Who are these people? Well, it’s your 24 year old son or daughter, new to the work force, and is throwing away money on rent somewhere. Encouraging your children to buy a home when they are young is some of the soundest financial advice you can give them. Equity in a home is an easy way to grow one’s portfolio with very little investment. But the fact of the matter is it doesn’t occur to most of us to encourage the younger generation to buy early in their lives. And trust me, it rarely occurs to our kids themselves to consider buying a home in the early twenties. They are more concerned with buying a new Halo 3 for their Xbox.

Why do so many people miss the boat on this opportunity? It could be they plan to be in the area for only a short time because they will job hop to advance their career, thus viewing a mortgage as “too permanent.” I counter to simply sell the house when you move. Or maybe they expect their income to double or triple over the next three years. I say buy a home now, then upgrade to a new home; sell or rent the old house. Investing in real estate is a proven, safe and solid return on investment. And with the right combination of credit history (or a history of paying utilities, cable and your cell phone on time) and no money down, you or someone you care about can start investing in the future.

When Junior starts his new job at the company and 401(K) is available, he’s been informed by his folks, boss or peers to enroll and contribute at least a little something to it with every paycheck. Yet, he is rarely counseled quit renting that apartment for $750 a month and buy a $75,000 house. Where will he come up with the money to do it? There are multiple options for first time buyers that allow for 100% financing. Get the seller to kick in closing costs (up to 6% of sales price with some products), and one can close on a loan and bring no funds to the table. If your home value appreciates 4% in the next year, that’s a nice return on a no cash investment.

For some time, I’ve considered writing this series for first time buyers to let them know buying a home is easier than they think. But, the more I thought about it, the more I realized the advice I would offer would most likely not reach my target audience. So parents, it is up to you to supply your kids with this last little bit of advice and help to set them free to further establish their independence in this world. Clip this article out and tape it to their iPOD or the steering wheel of their car - someplace it will get noticed.

I think for most of us who have been through the experience, our first home buy was a very daunting experience. There are so many choices and unknowns - it can be overwhelming. In this series, I will try to break it down the process into small logical steps and make it easier understand the steps involved in financing your first home. Where do you start? That is perhaps the easiest part. Our newly established worker should first make a list of all his or her debt obligations such as student loans (unless deferred), car payments, credit card debt, etc. Hopefully at this age, this will be a small list. Then add what you think amount you could afford for a mortgage. Take that amount and divide it by your gross monthly income. If you come in at 43% or less, you’re in business. If you have something in your savings or checking - great. If not, don’t let it deter you. You have options.

Contact a mortgage specialist to drill out the details and find a good realtor who knows your market for housing you can afford. What next? Get ready to tell your landlord “Adios!.”



Repossession

Contrary to what you may think, you don’t manage your credit applications and payments in a vacuum. Your credit behavior (as some have learned the hard way) is tracked by credit bureaus such as Equifax Canada and TransUnion of Canada.

This information is tabulated, and then you are assigned a credit rating. It’s important for you to maintain as high a rating as possible. The following information shows you how you can be sure to earn a good score, and why it’s so important to do so.

Lenders Have Access To This Information.

Think about it. When you decide to apply for a mortgage for a home purchase, or a hefty loan for home renovation - don’t you want A+ right up there beside your good name?

Your Good Name Is Really What It’s All About.

In the financial world, your credit profile is your reputation. If you have a good record, it means smooth sailing ahead for you. If your record isn’t all it should be, you might be in for a bit of rough weather when it comes to acquiring the monies you need — at the interest rates you want.

Your Payment History.

Credit card debt — is one of the most important factors considered when your score is being tabulated. Any missed, late, or neglected payments are duly noted. Not only does a prompt payment history buff your credit image — it saves you money in interest, and assures a quicker retiring of that debt too.

Timeliness Of Payments.

Actual amount of payments, the state of your credit card balances versus credit available, the number of cards you own, the frequency of your requests for more credit - These are just some of the tidbits of personal financial information that make up your credit profile. This comprehensive history is compiled to show lenders how reliable a debt risk you are. To put it simply they want to know whether or not you are credit worthy.

Your credit score is established with a mathematical formula.

Various factors are weighed and balanced and given a certain percentage value towards your final score. Credit bureaus also take into consideration — in addition to factors already mentioned — your existing debt burden, your actual and potential income (remember you do give out these details when you apply for credit), your debt to income ratio, your past financial problems (any bankruptcy or foreclosure remains a long time on record), your job stability -

essentially any piece of public information that helps build an accurate as possible risk assessment of you as debtor.

Your Credit Rating Is A Fluid And An Ever-Changing Thing.

It is dependent upon your present financial circumstances and any actions you make. The credit bureaus always follow your money trail. Because the formation of your profile is an on going thing, it’s vital for you to consistently practice reliable and responsible debt handling. The good news? The ever-changing quality of your credit rating allows you to continually aim for a higher score. Think of your rating — not as a burden — but as a challenge and an opportunity.

Infrequent Requests For Additional Credit?

That’s a really good sign to a lender. Keep in mind that mortgage and loan shopping won’t impact you negatively if it’s done in a concentrated time period. The credit bureaus interpret this flurry of activity positively — as long as it doesn’t occur too frequently. You want to look savvy, not desperate.

How Much Plastic Is Too Much?

Too many credit cards red flag you to potential lenders. Limit your cards to three or four, and try to maintain longtime use of at least one card. This is a key way to build up an excellent credit history. The amount of credit you use, versus credit available, is really telling too. Keep your balances low.

It’s Your Right To Pull Up Your Credit Report Profile.

This is something that is in your interest to do so. (You can do this online at www.equifax.com). Experts advise you to check it out at least once a year. Doing so gives you the opportunity to correct any errors or misinformation that may be there. Practice reliable and responsible debt management.

Then, when you do actually need money for a major undertaking (like the purchase of a home), your credit rating will be an asset, not a liability.



Passive Income

Investment Mortgage – More commonly known as a buy-to-let mortgage, this type of deal involves getting a mortgage on a property which you intend to rent out to someone else. Instead of being calculated according to your income, an investment mortgage is calculated based on the projected income from your investment, for example a house being rented out as student accommodation. A BTL mortgage deposit is typically 10%, and is available is a repayment or interest-only option.

Key Worker or Shared Ownership Mortgages – These are a newer type of deal which allows someone in rented accommodation from a Council or housing association to purchase part of the property they occupy, while still paying rent on the other half. This option is also available for ‘key workers’ such as nurses, teachers or police officers, who are typically on lower incomes. First-time buyers can also benefit from these schemes, as there are some which allow part-purchase of new homes from participating builders.

Offset Mortgage – If you have substantial savings, an offset mortgage can be a great way to keep your repayments to a minimum. It takes the amount you have in a savings account and counts this towards you total mortgage debt and therefore reduces the amount you owe. When you earn interest on your cash savings, you avoid paying interest on the equivalent amount of your mortgage. The principle is similar to a current account, or combined mortgage (see part 1).

Overseas Mortgage – This is self-explanatory; it’s a mortgage you take out on a property abroad. It typically involves more work and potentially higher admin costs, and of course if you’re planning on renting out the property to tourists you need to make sure the demand is there. But if you choose the location carefully you could reap the rewards and recoup your initial costs. Different countries have different property laws so you’re better off consulting with a specialist overseas mortgage broker before making any final decisions.

Pension Mortgage – This is a form of endowment mortgage, with the repayments going towards paying the interest each month. But instead of investing directly in shares, a pension mortgage requires you to pay an additional sum into a pension plan to cover the capital at the end of the term. This is still tied to the Stock Market and therefore cannot guarantee to cover the whole capital at the end. Payments into the pension plan must be kept up regardless of other financial hardships if the final sum is to stand a chance of clearing your capital, but as a pension plan is not legally accessible until after the age of 55, some of the temptation to spend it is removed. One major disadvantage this has over a repayment mortgage is that there is no opt-out; you’re tied to the deal until you reach retirement age. Potentially this could mean a term much longer than the standard 25 years, and therefore more interest would be paid.

Repayment Mortgage – We come to the mainstay of the mortgage industry, and the most common type of deal. A repayment mortgage is the only way you are guaranteed to have full ownership of a property at the end of the term, provided you’ve kept up with repayments. The amount you pay each month on this type of mortgage is used to pay off part of the interest and part of the capital, so there is nothing left to pay at the end of the mortgage period. The early years of a repayment mortgage are mainly spent paying off the interest and only a small amount of the capital, but this is often preferable to other types where you pay off nothing but the interest.

Remortgage – If you’re part-way through paying off your mortgage, and find you need a large amount of cash for repairs, renovations or perhaps even a holiday or wedding, you could remortgage your home and release some of the equity on it. This often involves switching lenders to find a better deal i.e. a lower interest rate, or perhaps taking out a new mortgage for the full property value and using this cash to pay off your current, lower, one. But be careful if you decide to do this, as there may be an early repayment penalty on your existing mortgage.

Self-certification Mortgage – Often assumed to be only for the self-employed, this type of mortgage is useful for anyone who cannot guarantee or prove an exact income amount or do not wish to disclose their total annual salary. People such as seasonal workers or freelancers, or perhaps company directors who do not have a fixed annual salary are all eligible for a self-certification mortgage. Other than the standard credit checks, there are no checks made on your financial status, income or employment record, so it stands to reason that a good credit rating is necessary for this mortgage.

Standard Variable Rate Mortgage – An extremely common type of mortgage, this takes its interest rates from the base rate like a tracker mortgage, but charges a higher additional percentage. So, the interest rate you pay will fluctuate when the base rate does, but you may pay 2% over instead of 0.75% (see part 1 of this guide for more details on base rate tracker mortgages). In addition, any drops in the base rate won’t necessarily pass benefits to you straight away, as the interest on these mortgages tends to be calculated monthly or annual rather than daily. Those with poor credit scores will end up paying a higher additional percentage than those with good credit histories.

It’s important to remember than none of these mortgages are mutually exclusive. For example, you could have overseas mortgages with capped rates, or remortgage from a tracker base rate to a standard variable rate. In all circumstances, it’s best to seek expert advice and shop around for the best rates.



Sell and Rent Back

There are many stresses associated with home buying - both financial and emotional. And frankly speaking, it doesn’t help that the process comes with its very own foreign language. While your mortgage broker can help de-mystify these terms, it helps to have a bit of a primer on what some of these terms mean. After all, it’s your money and your home we’re talking about; as a Mortgagor, you have a right to understand what you’re reading. (You didn’t know you were a mortgagor? Read on…)

We’ll start with Amortization” and “Term”. Both refer to periods of time in the life of your mortgage, and you’ll want to be sure that you understand the difference.

The amortization” of your mortgage is the length of time that would be required to reduce your mortgage debt to zero, based on regular payments at a specified interest rate. The amortization period is typically 15, 20 or even 25 years, although it can be any number of years or part-years. You could establish that you are able to make a certain payment each month of say $950 for your $130,000 mortgage at 5.5%. In this case, your amortization period will be just under 18 years. Or you could tell your broker that you’d like to be mortgage-free in just 10 years. With an amortization period of 10 years at the same interest rate, your $130,000 mortgage will cost you about $1,407 per month. That’s a tougher monthly payment, but you would save thousands of dollars in interest. (More than $35,000, in fact.) As you arrange your mortgage, then, keep in mind that your amortization period may be fairly long — although the shorter you can make it, the less you’ll wind up paying for your home in the long term.

The “term” of your mortgage will typically be shorter. The “term” is the duration of your mortgage agreement, at your agreed interest rate. This will be a very specific length of time, although you will have several choices. A 6-month mortgage is a very short-term mortgage. A 10-year mortgage will be one of the longest terms, generally with a higher rate of interest to represent the higher degree of uncertainty in the economic outlook. After your mortgage term expires, you will need to either pay off the balance of the mortgage principal, or negotiate a new ontario mortgage at whatever rates are available at that time.

Now, back to the term “Mortgagor”. This is one of three very similar terms: “Mortgagee”, “Mortgagor”, and “Mortgage”. A Mortgagee is the lender of the money: a bank, company, or individual. A Mortgagor is the borrower: the person or persons (or company) that is borrowing the money, and who will pay it back to the mortgagee. The Mortgage, of course, is the legal document that pledges the property as a security for the debt.

Still confused? Speak with a mortgage professional. Get the best mortgage suited to your needs and all your questions answered in plain talk.



Passive Income

In your uncertain times, when you are passing through a low in your life due to financial hardships, a source of cash is what can help matters out for you. The reasons can range from circumstances as adverse and diverse as illness, divorce proceedings and the like. And if you have a home of your own still standing good, you need not worry. Your home can come to your rescue in any such difficult situation. You can think of quick sale. Also when you have relocation on your mind, you can sell your house fast to gain on time and money. Quick sale helps you out with enough cash in a short time to see your plans through.

Availing to the services of the property dealers renders for you a major help in property evaluation for free, thus you can decide on the proper pricing of your house without much of a problem. If you are not happy with the original price listing for your property, you can also go for a quick renovation. This is just like giving final touches to your beloved home, throwing a few pounds here and there, more so on improving the decor of your kitchen and the bathroom, which can result in a major improvement in the buyer’s perception and pricing of your house.

Whatever your personal circumstances, you can plan to sell your house fast. One major benefit for many people is that it helps them to stop repossession of their house, as and when they are facing such an emergency. A quick sale relieves you of your mortgage payments as well.

You can contact a property agent online, who can help you accomplish a quick sale in order to raise cash quickly. You can avail to their services and make use of their experience and professional expertise. With access to huge resources, which includes a large network and an information database and sources, they can help you sell house fast

, while saving you all the major headaches of paperwork and legal formalities as well.



Quick House Sale

Times are hard when financial burden is on your shoulders, when debts are heaping upon you and you have nowhere to look except your house. However, you need not to worry since financial crunch can happen to anyone in today’s dynamic times of fast lifestyles and increased consumer and luxury needs.

The economic exigency in your life could have arisen out of various reasons. The common reasons why people have to meet with such situations often includes the cases such as that of divorce. At times, defaults on your debt payments can bring things to a head such that you might face the threat of repossession of your house. In such a situation, rather than lose the house, it is better to sell house fast as to repay the debt and be clear, while also saving your credit report from getting sullied.

This is a popular and also a preferable means to drag you out of your dire situation. You need to sell your house fast as to recover the equity from your house and quickly get access to a large amount of cash that can relieve you of the debt quandary. This quick house sale scheme ensures that you can bank upon your most trusted asset: your home.

At the same time, since it involves your property, to sell house fast may not be very easy. You have to take care of paperwork as well. This is besides the hassle of finding a potential buyer who should not deprive you of a good price for your home by bargaining which is unfavorable to you. The best thing to avoid such circumstances is to avail the help of professional property dealers, who with their knowledge of the real estate market, can help you with valuable advice and also fetch a good price for your house by exposing your property to a wide range of interested buyers through proper advertising and marketing.



Repossession

There are both advantages and disadvantages to adjustable rate mortgages. Your lender may be pushing an adjustable rate mortgage for any number of reasons, including that they are more profitable for the lending company. If you only look at the advantages of an adjustable rate mortgage, they can sound pretty good. You start with a lower interest rate, which means lower monthly payments. Because of the lower payments and rate, you may be able to afford a larger mortgage. Your lender may be pitching it as a way to buy a bigger house than you could otherwise afford, or suggest that it’s a good way to get into the housing market. Most commonly, the lender may suggest that you should take the adjustable rate mortgage for now, and refinance later when the rates adjust up.

While all of these things are true, there are also cons to an adjustable rate mortgage. It’s important that you consider both sides of the issue before making a decision on the type of mortgage that you want to take out.

What an adjustable rate mortgage is

Unlike a fixed mortgage, which comes with a specific interest rate that remains the same for the life of the loan, an adjustable rate mortgage (ARM) has an interest rate that fluctuates according to a specified index. Your adjustable rate may be tied to the interest rate on Treasury Bonds, to the Consumer Price Index or to a number of other indicators. If that index rises, your interest rate - and your monthly payment - will rise. If it drops, so will your interest rate and monthly payment.

Why adjustable rate mortgages can be attractive

When lenders approve a fixed rate mortgage, they are placing a finite limit on the amount of money they’ll make from that mortgage. An adjustable rate mortgage offers the lender the possibility of making more money if interest rates rise over the life of the loan - which is a good possibility. To offset the limit on fixed rate mortgages and make adjustable rate mortgages more attractive to home buyers, lenders typically offer lower interest rates on adjustable rate mortgages than they do on fixed rate mortgages. In essence, they are offering borrowers a more attractive rate in return for assuming the risk that their mortgage rate and monthly payment will rise over the term of the loan.

The down side of adjustable rate mortgages

When looked at in that light, some of the cons of an adjustable rate mortgage become obvious.

1. Interest rates can go up, raising monthly payments as well.

Most borrowers understand and accept that their monthly mortgage payment may rise, but are willing to take the chance that their mortgage will continue to remain affordable. It’s important to know the caps on interest rate rises by which your lender is bound. When you shop around for the best adjustable mortgage, it’s important to look further than the initial interest rate so that you understand exactly what expenses you may be agreeing to.

2. Over time, payments nearly always surpass the payments on a fixed rate loan for the same amount.

If you’re planning to stay in your home for the long haul, this can be an important consideration. Depending on the specific loan agreement that you make, it may be several years before the interest rate and monthly payment reach and surpass the monthly payment for a fixed mortgage. If you’re only planning to stay in your new home for a few years, this can work to your advantage, because you’ll be paying lower monthly payments for most of that time. If, on the other hand, this is your dream home where you plan to live the rest of your life, a fixed rate mortgage is probably more economical.

3. Fluctuating payments can make it difficult for you to make a budget.

While many ARMs only adjust once a year, some may adjust as often as once a month. More frequent adjustments can make it very difficult to fit your monthly mortgage payment into your budget because you will only know what your next month’s payment will be when you receive your notice. Even in the longer term, a fluctuating mortgage payment can make it difficult for you to plan long-term savings and investments.

4. If fixed rate mortgages become favorable enough that you decide to switch, you’ll have to refinance and incur the costs and fees related to refinancing your mortgage.

5. The annual interest cap may not apply to the first interest adjustment, and it may be a big one.

Many lenders offer very low initial interest rates on ARMs to attract first time home buyers. Often, these mortgages exempt the first increase from the annual cap on adjustments. This can be especially difficult if the ARM was one of the hybrids that offered a low fixed rate for one to five years, with a jump to market interest rates at the end of the specified period. When that happens, your monthly mortgage payment can suddenly rise by hundreds or even more than a thousand dollars.



Rent Back