The mortgage market is constantly changing, and smart consumers keep a close eye on those changes to determine the most strategic time to apply for a mortgage. At this point, the difference in interest rates between an adjustable-rate mortgage (ARM) and a fixed-rate loan has narrowed significantly. Therefore, more applicants are opting for a fixed-rate mortgage when purchasing a home. And an increasing number of homeowners are refinancing their existing ARM with a new fixed-rate mortgage.
“The most recent economic indicators show that inflation is, indeed, being held in check,” said Freddie Mac’s Frank Nothaft. “That news allowed long-term mortgage rates to drift a little lower in recent weeks. Shorter-term rates, however, rose in reaction to comments by Chairman Bernanke, of the Federal Reserve Board, that hinted at continuing rate hikes this year. The housing industry remains fundamentally fit as we continue to progress into the spring home buying season,” Nothaft said.
Fortunately, mortgage interest rates are still at historic low levels, while home prices continue to rise. An increasing number of applicants are applying for 35 and 40 year term mortgages as a means of reducing their monthly payments while staying with a fixed-rate loan. This also makes it easier to qualify for a needed mortgage.
The concern about an ARM loan’s increasing interest rates and payments in future months and years is understandable. Many recent applicants are seeking more peace of mind by applying for a fixed-rate loan when purchasing a home or refinancing their mortgage.
Source: http://www.ArticlePros.com/author.php?Jim Woodard
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