Cruz Mortgage Tips

If you are like many people you may have decided to opt for a three year adjustable rate mortgage (ARM). The advantage of an adjustable rate mortgage is that the payments are often less than with a flat rate loan. But there's something else you should pay attention to.

Take a hard look at the Lifetime Cap Rate. The Lifetime Cap Rate is the maximum amount that the mortgage can increase over the course of the loan. Most adjustable rate mortgages have a lifetime cap rate of 6%. This means that the interest rate on the loan can never increase by more than 6%.

If you have mortgage proposals compare the cap rates of the different loans. One of the loans might carry a lower payment in the short term, but the higher cap would let the interest rate rise more in the long term. Remember, eventually the long term becomes NOW!