When you are shopping for an Adjustable Rate Mortgage, the important thing to consider is the margin. Each time your loan is adjusted, the new interest rate will be tied to an index of Treasury notes. The margin is the percentage point above that index where your rate will be set.

Let's suppose that you have a one-year ARM with a 2.5 margin. Your initial rate was 7.5%, and during the first year of the loan, the index of 1-year Treasury notes was at 6.25%. The rate for the second year of your loan would be adjusted to 8.75%. With a margin of 2.75, it would increase to 9%. Some lenders offer lower initial rates with higher margins. In this case, the subsequent rates could be higher after the first year, than if you chose a higher initial rate with a lower margin.

If you are confused by the various mortgage offers, ask a professional mortgage broker to sit down with you and show you how it works. Today the rates and different financial possibilities are so variable that it is a good idea to talk to a mortgage broker--they usually know where the best rates can be found.

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Rose Price
Prudential Landmark Real Estate
100 Trade Centre Dr. Suite 102
Champaign, Illinois 61820
217-202-8843
217-352-1933
800-397-2155
Fax: 217-378-1281
roseprice@number1expert.com

When you choose Rose Price to help you buy or sell your home, you will be working with a professional challenged to incorporate the latest tech-tools into her daily business operations. To meet that challenge head-on, Prudential Real Estate Affiliates, headquartered in Irvine, California, launched a program to certify an elite group of its own agents as tech-whizzes who are capable of using the latest electronic tools to enhance the service they provide consumers. Rose is currently a Prudential Certified agent.