So, you have an adjustable rate mortgage, what to do, what to do?
A lot of consumers took advantage of low mortgage rates five years ago by taking out an adjustable rate mortgage. These mortgage loans, generally fixed for 3 years or 5 years, 7 years or 10 years, allowed consumers to save thousands of dollars in interest by having an interest rate below the rate of a fixed rate mortgage.
For example, on a $300,000 mortgage, in November of 2004, you could get a 5/1 ARM (principle and interest payments) at 4.5%. The comparable 30 year fixed rate loan at the time was around 5.375%, giving the adjustable rate mortgage a monthly savings of $159 per month . . . or $9,540 over the first 60 months (5 years fixed term). Saving $10,000 is good, not toxic, or