Tipif You Want Less Volatility

Historically among the least volatile rates have been the cost of funds and the Libor index. However, as we move into new economic climates, that could change. Lenders should provide you with a chart showing changes in the index for your loan. Be sure you ask for a chart that includes the period of 1979 through 1981 and 1999 to 2003 so you can see how the index performed in both high-interest-rate and low-interest-rate economic conditions.

falling, you may want a more volatile index that will reflect falling rates in a more rapidly falling monthly payment.

In addition, don't compare just interest rates and points with ARMs. Sometimes an ARM with a higher interest rate and more points is a better deal, if it has a more favorable adjustment period, steps, margin, and so on.

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