Consumer Handbook on Adjustable Rate Mortgages (Package of 100)

The "Consumer Handbook on Adjustable Rate Mortgages" (known as ARMs in the real estate industry) is an invaluable handbook for home buyers who are considering obtaining an adjustable rate mortgage to finance their home purchase. Full of useful tips and tools, from worksheets to glossary of terms and helpful consumer resources. Explains different types of ARMs and the features and pitfalls, including consumer cautions before choosing this type of home loan with balloon payments and in later years and pre-payment penalties. Published January 2014; 41 pages. Sold only in packages of 100 under this stock number.

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1. Introduction ................................................................................................ 5
1.1 Mortgage shopping worksheet ................................................................. 6
2. What is an ARM? ......................................................................................10
3. How ARMs work: the basic features ........................................................12
3.1 Initial rate and payment ......................................................................... 12
3.2 The adjustment period ........................................................................... 12
3.3 The index ................................................................................................ 13
3.4 The margin .............................................................................................. 14
3.5 Interest-rate caps .....................................................................................15
3.6 Payment caps .......................................................................................... 18
4. Types of ARMs .................................................................................................... 20
4.1 Hybrid ARMs .......................................................................................... 20
4.2 Interest-only ARMs ................................................................................ 20
4.3 Payment-option ARMs ........................................................................... 21
5. Consumer cautions ............................................................................................ 24
5.1 Discounted interest rates ....................................................................... 24
5.2 Payment shock ........................................................................................ 25
5.3 Negative amortization ............................................................................ 27
5.4 Prepayment penalties and conversion ................................................... 28
5.5 Graduated-payment or stepped-rate loans ............................................ 29
6. Where to get information ................................................................................... 30
6.1 Disclosures from lenders ........................................................................ 30
6.2 Newspapers and the Internet ................................................................. 31
6.3 Advertisements ....................................................................................... 31
Appendix A: ............................................................................................................... 32
Defined terms .................................................................................................. 32
Appendix B: ............................................................................................................... 36
More information ............................................................................................ 36
Appendix C: ............................................................................................................... 37
Contact information ........................................................................................ 37
Appendix D: ............................................................................................................... 41
More resources ................................................................................................ 41

This publication would be useful to potential home buyers, realtors, mortgage brokers, bankers, and others who need to explain mortgages and home loans.