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CHAPTER XIII-- AFTER THE INK DRIES . . .

LESSON 26: MONTHLY PAYMENT CHANGES -- WHAT CAUSES THEM AND HOW TO COPE

During the terms of their adjustable-rate mortgages, ARM customers expect their monthly payments to change repeatedly. But even fixed-rate mortgage customers experience payment fluctuations due to escrow adjustments, PMI removals and other things. In this lesson, we'll talk about a few of the things that lead to payment adjustments for both ARMs and FRMs, as well as how to prevent those changes from disrupting your financial life.

The biggest problem -- skyrocketing rates and payments -- affects ARM holders only, for obvious reasons. Because they pay interest at rates that fluctuate with market changes, their payments can increase dramatically if the rate environment takes a turn for the worse.

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Here are a couple of steps ARM borrowers should take to prepare themselves for potential trouble if they notice rates heading higher:

1) Start socking away part of the money you're saving each month by avoiding a fixed rate loan.
There's no way to know for sure if rates will be higher one or two years down the road, but that extra $50 or $75 a month gives you a cushion to draw upon if they are. The more time before an adjustment, the more money a borrower can save, but even people a few months away from a rate change can see some benefit.

(continued on next page)

 

TABLE OF CONTENTS

CHAPTER I
  Lesson 1
  Quiz

CHAPTER II
  Lesson 2
  Quiz

CHAPTER III
  Lesson 3
  Lesson 4
  Lesson 5
  Quiz

CHAPTER IV
  Lesson 6
  Lesson 7
  Quiz

CHAPTER V
  Lesson 8
  Lesson 9
  Quiz

CHAPTER VI
  Lesson 10
  Lesson 11
  Quiz

CHAPTER VII
  Lesson 12
  Lesson 13
  Lesson 14
  Quiz

CHAPTER VIII
  Lesson 15
  Lesson 16
  Lesson 17
  Lesson 18
  Quiz

CHAPTER IX
  Lesson 19
  Quiz

CHAPTER X
  Lesson 20
  Quiz

CHAPTER XI
  Lesson 21
  Quiz

CHAPTER XII
  Lesson 22
  Lesson 23
  Lesson 24
  Quiz

CHAPTER XIII
  Lesson 25
  Lesson 26
  Lesson 27
  Quiz

CHAPTER XIV
  Lesson 28
  Lesson 29
  Lesson 30
  Quiz

Definitions




 
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