There were no surprises on Wall Street, events overseas such as the Israeli election results had been anticipated, and the new Administration and Congress were mutually civil. The result was little change in the mortgage arena, good news considering that rates are now at low levels relative to the past few years. Even bigger gaps will be necessary, however, before ARM will be generally regarded as attractive. Because a larger loan amount is outstanding, lenders have more risk and so interest rates are somewhat higher than for conventional financing. Because the interest rate changes, monthly payments can also rise or fall.
Most ARMs have annual and lifetime interest caps, and also annual and lifetime monthly payment caps.
Interest rates are calculated at a given percentage of the loan amount per year, say 7 percent annually. Thus if a loan interest rate moves from 6.60 percent to 6.65 percent, it has gone up .05 percent or 5 basis points. Be aware that the rates presented here may not reflect the rates for individual loan products at any given time, and that rates are constantly in flux. For additional information regarding current mortgage rates, please consult the Bank Rate Monitor Conveniently compare rates from multiple lenders at HomeAdvisor . Written by Realty Times Staff Click here for a printer-friendly version of this article.