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Re: Re: Re: Re: Re: Re: new car purchases
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Posted by big fred on February 17, 2004 at 21:46:37 from (184.108.40.206):
In Reply to: Re: Re: Re: Re: Re: new car purchases posted by toolman on February 17, 2004 at 21:27:01:
Interesting. An ARM is an adjustable rate mortgage. They start out with a low initial rate, which helps young families get payments they can afford. Then, depending on the specifics of the mortgage, there comes a time in 3, 5 or 7 years when the rate changes, usually gets higher, but that's spelled out in the mortgage contract. My ARM is (best I can recall) set after 5 years to change to whatever the T-bill rate is, plus some factor, I think it's 1.65% The maximum amount it can increase in any step is also set in the contract, mine is 2%, and lastly, the highest it can ever get is also in the contract, I think mine is 8.65% or something like that. My initial rate was 4.75% at a time when a 30 yr fixed woulda been around 6%. But there is no renewing, it's all set out in the contract at the start. Of course, you can re-finance, which involves getting an entirely new mortgage contract, and paying off the old one. If you do that, you generally gotta pay a finance charge up front and also spring for an appraisal.
Thanks for the explanation of the Canadian way, I wouldn't have expected differences between the U.S and Canada on mortgages, I learned something new.
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