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Cheap Loans Are Here

[May 7, 2010.]


Finally cheap loans are making a comeback! Home equity loans, 5-year ARMs, and 1-year ARMs are a great value right now. When fixed rate loans go up, adjustables come into vogue. Check out these three great deals.

Home Equity Loans

The FOMC meets every six weeks or so, but not a thing has happened to interest rates in ages. The federal funds rate is still almost 0%. The prime rate, which floats above the federal funds rate by about 3%, is at 3.250%. This makes most home equity loans (many of which are based on prime rate) an extremely good value. If you had a home equity loan with a low margin, say 1%, your fully indexed rate would only be 4.250%.

5 Year ARMs

A 5 year ARM is a hybrid mortgage--a fixed interest rate and an adjustable interest rate. The interest rate is fixed for the first 5 years and then adjusts based on the index and margin. According to the Freddie Mac Primary Mortgage Market Survey (PMMS) this week, the average conforming 5 year ARM was 3.97% with 0.7% points and a 2.74% margin. 3.97% for 5 years. That's great!

1 Year ARMs

Not everyone feels comfortable with a mortgage that is only fixed for 1 year. But, if your time-frame and plans for the property make this product work, this loan can save big money. This week's PMMS reports the average 1 Yr ARM to be 4.07% with 0.6% points and a 2.75% margin. It starts a little bit higher than the 5 Yr ARM, but if indices continue to go down, when it adjusts, it could go lower than the 5 Yr fixed. That would make it a great value.

Making One of Two Loan Decisions

If you have a need to tap the equity in your home, decide today to shop for a new home equity loan.

If you missed out on refinancing when the fixed rates were at their lowest, you can get a second chance with today's low ARM rates. Shop for the best refinance rate now.


About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.

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