Mortgages And Interest RatesPosted by Nick Niesen on October 29th, 2010 Interest rates can affect the type of mortgage you choose and dictate when it?s wise to make a change. Here are a few of the factors that can be affected by a swing in interest rates: Choosing a mortgage Some people choose an ARM even when rates are rising. This is because the interest rate on an ARM is substantially lower -- as much as two percentage points lower than that of a 30-year fixed-rate mortgage. That means you?ll pay less until mortgage rates have increased a full two percentage points. After that, you?ll pay more than a fixed rate. There are also hybrid ARMs, which have a fixed rate for a certain time period -- typically three to 10 years -- and then become adjustable. (A 5/1 ARM, for example, has a fixed rate for five years, after which the interest rate is adjusted annually.) Hybrid ARMs can be the right choice if rates are likely to rise in the short-term but then flatten or fall. However, these long-term trends can be difficult to predict. Refinancing For more information on mortgages and interest rates, visit http://www.lendingtree.com/cec/yourhome/yourmortgage/interest-rate-trends.asp? Like it? Share it!More by this author |