Re: How can mortgage payment be this low?

"Dana Compton" <[EMAIL PROTECTED]> wrote in message
news:[EMAIL PROTECTED]
> >my mortgage payment nearly in half (A.R.M. 1.25% start rate/3.87%
> >APR)
> .ARM=Ajdustable rate mortgage.
>
> There  is an adjustable rate mortgage. It starts off low and the interest
rate
> goes up for a number of years. 4 or 5 I think. It is what people get when
they
> want to overbuy and can't qualify for the higher payment. The only time to
use
> this one is on a property you intend to fix up and sell quickly. less
interest
> paid out of pocket.
>
> There is also a mortgage that changes with the current interest rates.
Usually
> gets a yearly review and has a cap, but the cap may be high.
>
> Both are a bad deal. You want a fixed rate mortgage.

The market in Canada is somewhat different.

We don't have points. What you see is what you get, interest wise.

And here variable rate mortgages have proven over and over again to be a
better deal than fixed rate. They don't go up over time, unless they have a
low introductory rate, they vary with the prime rate, and that can be up or
down. But over the past ten years I've noticed they have always been lower
than fixed rates.

All the major banks have clauses in their variable rate mortgages which
allow you to lock in at any time - so you can have you cake and eat it too
by locking in once it rises to the level of the fixed rates.

The big but is that our mortgage insurers will insist on a 5 year fixed(at
least they used to) for your first term.

James Linn