A senior gentleman gave me a call yesterday. For 15 minutes I assessed his situation and told him definitively he should move forward only with an adjustable rate mortgage.
Well, this isn't my first rodeo and know how most seniors feel about adjustable rates. So, my goal is, after I tell them they should get an ARM to explain myself as fast as humanly possible.
The adjustable already isn't in good standing with the general public. With a conservative group like seniors it's even worse. I better start making sense and quick-like.
The gentleman on the other end of the phone was having none of it and there wasn't a split second that went by before he put the kibosh on my explanation. He wanted a fixed rate and that was that.
I know when I'm right. This guy was letting his own rather uninformed opinions get in the way of logic. Without a doubt he could save thousands if not tens of thousands of dollars by listening to me. Not happening.
I never got my point across to him, but since you can't shush me maybe I can get it across to you. The ARM is not always the best choice, but for most people's situation it is.
The reason is the adjustable rate mortgage is available as a line of credit. The fixed does not have this option.
Lenders qualify the senior to receive an available sum of cash equal to 50% to 75% of the home's value. Most only need a portion of this money. This makes the ARM and line of credit more viable.
The adjustable rate, unlike the fixed, gives the borrower to pull out money, from the line of credit, as needed and when needed.
This benefits the borrower's equity. Unused money in the line of credit has no negative affects on the borrower's equity. It's not accruing interesting eating away at the precious equity.
Unlike the ARM, the fixed rate option allows only one draw of funds. So, the borrower better make it count. And interest starts accruing immediately on the entire sum.
Let's say my guy above, who wouldn't listen to me, owned his home free and clear (which he did). He also wanted to supplement his income. His is the most obvious example of someone who should go with an ARM. Going with a fixed would force the borrower to draw out a big sum and put it into some other investment while waiting to use it.
It does not compute. The rate charged for money pulled out would be greater than the return from the bank or CD. The best option is to go with the ARM and leave it the line of credit. On top of that the 15 year average interest rate on the ARM is lower than the current fixed rate. - 15224
Well, this isn't my first rodeo and know how most seniors feel about adjustable rates. So, my goal is, after I tell them they should get an ARM to explain myself as fast as humanly possible.
The adjustable already isn't in good standing with the general public. With a conservative group like seniors it's even worse. I better start making sense and quick-like.
The gentleman on the other end of the phone was having none of it and there wasn't a split second that went by before he put the kibosh on my explanation. He wanted a fixed rate and that was that.
I know when I'm right. This guy was letting his own rather uninformed opinions get in the way of logic. Without a doubt he could save thousands if not tens of thousands of dollars by listening to me. Not happening.
I never got my point across to him, but since you can't shush me maybe I can get it across to you. The ARM is not always the best choice, but for most people's situation it is.
The reason is the adjustable rate mortgage is available as a line of credit. The fixed does not have this option.
Lenders qualify the senior to receive an available sum of cash equal to 50% to 75% of the home's value. Most only need a portion of this money. This makes the ARM and line of credit more viable.
The adjustable rate, unlike the fixed, gives the borrower to pull out money, from the line of credit, as needed and when needed.
This benefits the borrower's equity. Unused money in the line of credit has no negative affects on the borrower's equity. It's not accruing interesting eating away at the precious equity.
Unlike the ARM, the fixed rate option allows only one draw of funds. So, the borrower better make it count. And interest starts accruing immediately on the entire sum.
Let's say my guy above, who wouldn't listen to me, owned his home free and clear (which he did). He also wanted to supplement his income. His is the most obvious example of someone who should go with an ARM. Going with a fixed would force the borrower to draw out a big sum and put it into some other investment while waiting to use it.
It does not compute. The rate charged for money pulled out would be greater than the return from the bank or CD. The best option is to go with the ARM and leave it the line of credit. On top of that the 15 year average interest rate on the ARM is lower than the current fixed rate. - 15224
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