Greenspan says
ARMs might be better deal
That was the title of an article in USA Today earlier
this year. Greenspan refers to Federal Reserve Chairman Alan
Greenspan. I promised you a synopsis of that article, and here it
is. Sorry it took a few days, but I wanted to make sure and hit all
of the relevant points. If you want to read the entire article, you
can either go to USA Today online (if you're a paying member) and look
under "Advanced Search" for Alan Greenspan for the date 2004-02-23 and it
will pull it up for you. Or, you can go to the site http://top10lists.freewebpage.org
and find a reprint of
the article.
Basically, Mr. Greenspan was saying
that people could save thousands of dollars by choosing adjustable rate
mortgages (ARMs) and that banks and credit unions don't usually give them
many options to do so. "Federal Reserve Chairman Alan Greenspan said
Monday that Americans' preference for long-term, fixed rate mortgages
means many are paying more than necessary for their homes and suggested
consumers would benefit if lenders offered more
alternatives."
Greenspan was making a standing
room only speech to the Credit Union National Association meeting in
Washington when he made these comments. "Overall, the household sector seems
to be in good shape," Greenspan said. "While borrowers can
refinance fixed rate mortgages (which made up more than 70% of the mortgages drawn
in January), Greenspan said homeowners were paying as much as 0.5 to 1.2
percentage points for that right and the protection against a potential
rise...". He suggested "A Fed study suggested many homeowners
could have saved tens of thousands of dollars in the last decade if they
had ARMs."
Now there are lots of innovative
programs out there, but Greenspan was talking to Credit Union officers
about banks and credit unions, which usually don't have or promote these
kinds of home mortgage loans. Too find a program that is an ARM and
is designed for someone with low income or with bad (or no) credit,
you have to consider using a Licensed Mortgage Broker. They have
access to a wide variety of programs through many different lenders, not
all of whom are as strict as banks and credit unions about credit scores
and income restrictions.
Further illustrating Greenspan's
point, the Mortgage Bankers Association said the average rate at the
time for a 30 year fixed mortgage was over 2 percent higher than for a 1
year ARM. And the fact is, the difference between what your bank or
credit union might charge you for a 30 year fixed mortgage , might
differ by 2-3% or more from the rate you could get on a 3 year ARM from a
mortgage broker! Speaking about banks and credit unions, Greenspan
said "American consumers might benefit if lenders provided greater
mortgage product alternatives to the traditional fixed-rate
mortgage."
Luckily, some lenders do provide
alternatives to the traditional products that your bank or credit
union might offer. Contact a reputable Licensed Mortgage Broker and
they'll be able to find a program that suits your needs. But
who do you trust to find you the perfect mortgage to fit your needs?
I've researched this quite a bit, and I do have a company I can
suggest. They can help you find a loan in almost any state, althogh
they specialize in the State of Florida, where they're located.
So no matter where you live or what your situation is, (and
especially if you live in Florida) give them a call or contact them by
e-mail before you buy a home or re-finance your current mortgage.
They're called Star Mortgage, Inc., and their web site is www.starmortgagebroker.com . Check
out their site and then contact them, they'll help you get
into your new home, or help you start saving money by re-financing your existing
mortgage..
My next post will be an article on
why loan calculators mortgage calculator might give you an
accurate, but misleading result, and how to get the best estimate of
what your actual mortgage cost might be. The best way to
do that is to contact Star Mortgage, they'll look at all the options and
give you a professional estimate of your actual total costs. In
fact, in a few days I'll post another Top 10 List (which you can read
right now at http://top10lists.freewebpage.org
)that lists the top 10 resons to pick star mortgage as your
broker.
Mr.
Mortgage
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