Note Buyers USA

All that glitters is not gold

In their early years, ARMs were selected by marginal borrowers when interest on fixed-rate loans started climbing. “Well,” the loan rep tells the disappointed homebuyer, “I can’t get you qualified at 9.5 percent for that 30-year fixed-rate loan, but here’s what we can do. We can qualify you at 8.0 percent for the ARM. And what’s great is that when interest rates come back down, you can convert this ARM into a fixed-rate 30-year loan.”

At What Cost and Rate?
Have you found that elusive free lunch? Probably not. On occasion, the convertible option pays off. More often, its chrome dazzles more than its horsepower. Few borrowers ever exercise their option to convert. Here’s why:

- Higher interest rate. Most borrowers think they can convert at the market rate.  Read more...

Adjustable Rate Mortgages

Now’s the time to slay the misconceptions about adjustable rate mortgages (ARMs) that misguide many borrowers, loan reps, and realty agents. These misconceptions block you from the information you need to choose wisely. As a result, you could bypass ARMs without a second look. Or you might select an ARM for the wrong reasons.
ARMs do not necessarily present more risk than fixed-rate loans. For many people, ARMs excite fears of potential loss. If interest rates head up, you stand to lose a lot of money as your monthly payments climb above the payments that you would have made with a 30-year, fixed-rate mortgage. Or you view the ARM risk in terms of uncertainty; you wonder if you can afford the higher payments. You fear that rate hikes might wreck your budget—or even force you to quickly sell the property.  Read more...