OfflinePage 171 - Adjustable-rate versus fixed-rate mortgages.
I am not sure what this means:
Adjustable-rate mortgages (also known as "ARMs") were created to reduce the monthly payment obligation of the borrower so that your monthly paymnet is lower than a fully amortized tradition loan.
I looked at amortization in the back of the book and it says that it means A reduction of debt on an installment basis over a fixed period of time.
Can anyone make the quote from Dean a little clearer for me????
SORRY!
__________________
Deb
Deb,
There has been discussion on this subject in the forums, but I'll try to summarize. If anyone can give a link, please put it in.
When you take out a traditional loan, they "amortize" the amount over the set length of time (15 years, 30 years), so your payments are the same every month.
With an ARM, your payments are less when you first start out, because the interest rate is lower. The problem is, the rate changes over time and the payments can jump to an amount that people can't afford. A lot of people are losing their homes right now because lenders gave out so many of these loans, and many people did not look ahead or understand what COULD happen.
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
Where I come from they call that a 'Variable Rate' loan and the other is just called 'Fixed Rate'
Thanks again.
Deb
ain't that the truth, thats a pretty big part of the FORECLOSURE CRISIS right now, SULLY.
YOUR HERO, SULLY
We probably call it both here, too. I understand how it would be confusing.
Hey, just a tip. If you have a question on ANY word or subject you can always Google it, too. There should be info on just about any subject. Maybe you can bring us back some good stuff. But never be afraid to ask a question in here, either.
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249