Switch from ARMs to Fixed Loans

The housing market has been sliding for over a year now. As interest rates continue to rise, it might be time to abandon the Adjustable Rate Mortgage in favor of Fixed.

Mortgage rates are on the rise. It might be a good time to consider taking fixed financing over option ARMs (Adjustable Rate Mortgages). Banks like to entice borrowers with lower rates on ARMs to increase their future upside on the loan.

Over the last five years mortgage rates have been at all-time lows. Borrowers have done well with either option ARMs or fixed financings because of the relative stability of interest rates. This nirvana may be coming to an end. With three years of Federal Fund rate increases, mortgage rates have begun to climb. Additionally, with the sensationalized coverage of the sub-prime lending markets, mortgage rates seem destined to rise.

In the face of these signs, borrowers will do better locking in today’s historically low rates. Additionally, borrowers who currently have ARMs should consider refinancing to a fixed rate now.