FIXED RATE LOANS

Adjustable rate mortgages were invented to protect lenders against the inherent risk within the interest rate market. Lenders prefer adjustable rate mortgages because there is a built-in cushion against the risk of rising interest rates, the cushion being called the "margin" or if you will, the "profit margin." This margin allows the lender to continue to profit in an always fluctuating market. Essentially, the lender has pawned off the risk of rising interest rates to the consumer.

It takes a lot of discipline and foresight for a homebuyer or someone refinancing to choose a fixed rate loan over an adjustable rate loan, simply because fixed rates are initially higher. The operative word in the previous sentence is initially. All adjustables have lifetime caps that, by far, exceed the still historically low fixed rates. For example, why would someone choose a fixed rate at 8.50% when the fully indexed adjustable rate is at 7.75%? The answer is that the lifetime cap of the adjustable is somewhere currently between 11.50% and 14.50%.

The lifetime cap to the lender is important. It is the lender's insurance against an uncertain future. The question that arises is: why would a borrower place themselves in a situation that would allow them the unfortunate opportunity to be charged an interest rate that is comparable to the interest rate on some credit cards? This is a question we will attempt to address.

WHY ADJUSTABLE RATES

Bankers Express Mortgage, Inc. cannot, in good faith, endorse any particular mortgage since different situations require various products. With that in mind we offer a full gamete of loans to meet your particular needs. In the early eighties, a need for a new type of home loan was identified by the lending industry. Interest rates were at an all time high, which in and of itself was enough to literally shut down the home buyingmarket. The "American Dream" of home ownership was rapidly diminishing due to very high interest rates.

Finally there came the introduction of a loan product that allowed the borrower to start out at a much lower rate than that of the current market. It allowed the first time (and veteran ) home buyer once again fulfill their dreams of home ownership. Today, the adjustable rate mortgage still allows for an easier qualifying home loan. It also allows the borrower to take advantage of declining and low interest rate markets. The borrower must be aware of the risk of any loan that is tied to an ever fluctuating index, that means there is an inherit risk that rates can move in an upward motion. For those concerned with the short term, or being able to qualify, or believe that rates are at the top of a market rather than the bottom, an ARM can really make sense.

With the guidance of a trained loan professional from Bankers Express Mortgage, Inc. you can rest assured that the product you receive will best suit your goals and objectives.

If you are already familiar with our products and would like more information, please call 1-888-845-8888