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Fixed vs. Adjustable? Still a Pressing Question |
The 30-year fixed rate mortgage has
historically been
the gold standard of mortgages. It's probably
the one
your parents had over the life of their loan.
However,
today's homebuyer is more sophisticated - or
confused - than the homebuyer of yesteryear.
Nowadays, mortgages are sold as "products" and
they can be dramatically different from each
other.
Perhaps the biggest question for someone in
choosing a
mortgage, is "adjustable or fixed rate?"
Adjustable rate
mortgages (ARMs) got a bad rap when rates were
climbing. People with ARMs panicked and
rushed to
refinance. Now that things have significantly
settled in
the mortgage world, people are taking a
closer look at
whether they want an adjustable- or fixed-rate
mortgage.
Why Adjustable?
Adjustable rate mortgages do just what
they say -
adjust.
If the rates go down, your mortgage goes
down, too. You don't have to have to pay
closing costs
to refinance to get that lower rate. Of
course, if the
rates go up, your mortgage payment will go
up, too.
Short term stays.
If you are not planning to stay in your
house for more than a few years, an ARM is a
good
choice, as you don't have to worry about the
rates
changing that much over a shorter period. If
it's a short
enough stay, you will be able to enjoy a low
"teaser"
rate for much of your payments.
You want your money elsewhere. If
you've
got a great
opportunity for your money to do really well
somewhere else, and you want to put as little as
possible into your mortgage, you can try an
ARM. For
every dollar you don't pay into your
mortgage, you can
put a dollar into an investment account or
some other
place you would like your money to reside.
You are comfortable with some unknowns.
If you are
comfortable with the word "adjustable" when
it comes
to your money, an ARM is a good choice. Perhaps
taking a gamble on the possibility that your
mortgage
payment will decrease sounds great to you.
Why a Fixed Rate?
What goes up may not always come down.
While an adjustable rate is great when rates are
dropping, it is not so great when they are climbing. For
borrowers who don't want to weather ups and downs
in
their payments, a fixed rate may be a better choice.
You plan to stay in your home for a long
time.
If you
know you are staying put for a good long
time, you
may want to know what your payment is going
to be for the duration.
You are risk-averse.
In a 30-year fixed loan, you know
today what your mortgage payment will be in
2030.
With an ARM, however, you don't know what it
will be a
year from now. For many, many people, this is
a deal
breaker. There is a cost associated with not
knowing
what your mortgage payment will be in 10
years, and
that cost is impossible to predict. And while
you can't
predict how much you could save if you choose an
ARM, you can predict what your mortgage will
cost.
You prefer a straightforward program.
ARMs can often be confusing because
there are several different types. If you do
not want to
have to dig too far into the details of your
mortgage, an
ARM is likely not right for you.
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April's Home Value Improver |
Six Easy Steps to Cleaning Out Your (yuck)
Basement
If you are like many of my clients, your
basement is not
a pleasant place to be. Damp, dark, dank, and
dusty
are just four of the unpleasant descriptors
that people
share when I ask them about those scary
places that
sit below the kitchen and living room.
Sure, the super-organized have wonderful shelves
with neatly labeled boxes for sports equipment,
wholesale club supplies, and holiday
decorations.
But, for those of you in the
I'll-get-to-it-another-day
crowd, who shove random items here and there,
the
basement is a downright scary place.
An unopened
wedding gift from the 90s peeks out above an old
infant sun shade, which sits atop some dusty
college
textbooks, and you don't even know where to
start. And
while spring is not necessarily the time to
spend your
weekend hiding out in the basement, it's a
good time
to do your, well, spring cleaning!
Here are some tips to get you going.
- Give away to a charity.
This is
the pile
for items such as that old wedding gift that
has never
been
opened, and the infant sun shade, for that
matter. The
Vietnam
Veterans and
Big Brothers/Big Sisters will come and pick up
clothing and household items.
- Give to a friend or family
member.
Think about
what others around you need. Do you have a young
relative who is setting up his first
apartment? Might he
like a set of glass coasters that your
children would
break inside a week? Maybe an older relative or
neighbor can use Grandpa's cane.
- Go to the recycling center.
Books,
cardboard
boxes, recyclable plastic, and sometimes
clothing can
go to your local transfer station/recycling
center.
- Go to a hazardous waste disposal day.
Paint,
lighter fluid, and filled aerosol cans are
among those
items you can't just drop in your trash
barrel. Most
cities and towns, however, have household
hazardous
waste days where you can get rid of that old
house
paint once and for all!
- Put in the plain, old trash.
A
broken
picture frame,
a pile of old puzzle pieces, some broken office
supplies, and other items (you know what they
are) fall
into the "no one would ever want" category,
and can go
right to the trash.
- Put in neat, organized storage.
Of
course, there
are some things that do belong in the damp, dark
basement. Holiday decorations, a stock of paper
towels, ice skating equipment, and laundry
supplies
are some of those items that legitimately have a
permanent home in the basement. A quick trip to
Target for some clear storage bins will solve
that
organization problem.
Now that you have your categories, you need
to find a
day that you can spend rooting through the
basement
stuff. If dust really bothers you, putting on
a surgical-type mask may make the task a bit
more pleasant.
Good luck!
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My husband, Kevin, is running the Boston Marathon
this
week. Every year, this event makes me think about
how
preparing to succeed in this 26.2 mile race is much
like
preparing to succeed in your financial life.
For every individual runner in the marathon, there is a
unique personal goal. For every person planning their
finances, there is a unique goal. The key to success is
to
set the goals that matter to you, to do the work you
need
to do, and to seek the support and resources you
need to
assist you.
You may not be ready to run a marathon, but you
definitely can be ready to achieve your financial goals.
I'm always happy to take your calls and emails
regarding home buying or refinancing.
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here for some great
information
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