With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here’s Why I Did It Anyway

My mortgage payments are by far my largest monthly expense, so when I recently got the chance to cut them, I cut them as deeply as I could — even though it meant doing something I never thought I’d do: Forgoing the security of a fixed-rate mortgage for an adjustable one.

An ARM, also known as a “variable-rate mortgage,” offers a low introductory interest rate—typically for three, five, seven or 10 years—and when that period ends the rate turns into a floating rate for the remainder of the loan. Once rates adjust, mortgage payments for an ARM can double or even triple. With today’s mortgage rates at or near record lows, future rates may have only one way to go: up.

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The Benefits—and Dangers—of Serial Refinancing

Millions of Americans have taken Refinancing-home-mortgages-rebounded-higheradvantage of today’s record-low interest rates on home mortgages. With rates consistently dropping over the last four years, the housing market has spawned a new group of consumers: the serial refinancers.

But the heyday may not last much longer. The Mortgage Bankers Association projects rates will drift up in 2013, with the 30-year rate on a fixed mortgage rising above 4 percent by the middle of next year, which will curtail retail volume.

However, with interest rates currently hovering around 3.5 percent, now is an opportune time for many to refinance—so long as they land their best offer. Click here to read the article.