Benefits of an ARM include:

• Ability to qualify for  more house since the qualification is based upon the first payment level.
• Gradual increase in payments if the ARM is correctly selected. This increase will hopefully be made up by an increase in your earnings.

Pitfalls of the ARM:

• Teaser, or introductory rates. This is why so many people are in trouble today. These rates mean your payments will be abnormally low at the beginning. The loss to the lender is made up by resetting after the introductory period to a level greater than the market rate. The change in monthly payment isn’t gradual, it happens at once, causing monthly payments to be more than many can pay. Foreclosure is the result.
• High prepayment penalties and excessively long prepayment periods. These lock the borrower into the loan, as it is not possible to borrow enough to pay these. Recently I have seen prepayment penalties of 7% and prepayment periods of up to 9 years.
• Income fails to rise as expected, Even if your income doesn’t increase, your payments may. You are obligated to make payments based upon your index, not your income.

I hope this series helps to explain the Adjustable Rate Mortgage. If you have any questions, drop me a line.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

A basic Adjustable Rate Mortgage (ARM) is based upon the following items (be sure your lending officer and real estate agent explains them in detail)

• An Index
• Margin
• Adjustment Period
• Maximum Increase per Period
• Maximum Increase over the Life of the Loan

INDEX: Each ARM is tied to an economic index. The index relates to the cost of the money loaned, to the lender. The loan interest, upon which the payment is based is equal to the INDEX + MARGIN. Be Careful when evaluating the index. A volatile index means your loan will adjust in an extreme fashion. Common indexes are:

• LIBOR, the London InterBank Offered Rate
• COFI, the Federal Cost of Funds Index
• T-Bills, the interest rate paid by the Treasury Bills.
• Many others may be used.

MARGIN. A percentage added to the index to allow the lender to recover costs and make a profit. If you are the borrower, you want this number to be as low as possible. If you are the lender, you want it to be as high as possible.

ADJUSTMENT PERIOD. This could be monthly, quarterly, twice a year, or yearly. Pick the one you decide will fit your situation. Pick carefully, however, you will not be able to change this later.

MAXIMUM INCREASE PER PERIOD. This one can be a killer. As a borrower, you want this to be as low as possible. An increase of 1% on a $200,000 loan is about an $80 a month increase. If you do this quarterly, you might find you cannot afford the payment.

MAXIMUM INCREASE PER YEAR. Again, another killer. Keep this number as low as possible.

MAXIMUM INCREASE FOR THE LIFE OF THE LOAN. This caps the loan. No matter what happens to interest rates over the life of the loan, this is the maximum interest rate you can be charged.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

Often vilified by the press as the cause of today’s mortgage mess, is the adjustable rate mortgage. (ARM)

The ARM was originally developed as an instrument to give people, often first time buyers a way to get on the property ladder earlier in life. These were often younger buyers, educated, in the early stages of their careers. These buyers typically had some money down and for their closing costs.

The ARM loan was often offered at a lower interest rate since the lender didn’t have the risk of inflation leaving the lender with a low return loan during periods of higher yields. These loans were typically limited to between 5 and 7 year terms, after which the loan would be renegotiated, refinanced to a fixed rate loan, or the property sold.

The advantage to the buyers is that they would be qualified for the loan on the initial rate, usually less than that of conventional loans. The initial payments were lower, and as their income increased, so did the payment.

The borrowers using these loans had every reason to believe that their income would increase as the loan interest and payments increased.

More recently, ARMs were used to finance borrowers who had minimal or poor credit records, and no real potential of increased income. Additionally, these buyers had little or no money to invest in the property, hence need to get their down payment and closing costs financed. As recent events have made clear, this is a recipe for financial disaster.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

• Home loan applications have increased for the second straight week. This may indicate more buyer interest.
• Slowdown in market activity has occurred. Historically, a great slowdown in market activity signifies the bottom of a market cycle.
• Bankruptcy and closings of mortgage lenders has slowed appreciably. In the past we saw several a week, not many at all now. Another indicator the bottom is near. Most news now is about the clean-up efforts at already imploded companies.
• Politicians are getting on the band wagon. These most reactive people are working at last to correct the market problems. They are addressing new programs for governmentally sponsored programs, and also working on sub-prime workout ideas. Politicians always react near the bottom.
• The VA loan maximums have been raised to equal conventional conforming maximums, now $417,000.
• FHA has initiated FHA Secure to help sub-prime borrowers refinance bad loans into something workable for the borrower.
• The Federal Reserve has acted to stop the liquidity problem, and will meet September 18 to consider further steps.
• Interest rates are slipping gradually. When interest rates fall, housing prices recover and increase.

Today’s outlook for the Phoenix area, which includes homes for sale in Sun City, Sun City West, Surprise, Peoria and Glendale Arizona is far better than in much of the nation. Job growth continues at a healthy rate, unemployment is less than the national average, and real income is increasing. Inventory of homes for sale is excellent, giving those who wish to buy a home a great selection to choose from.

Today’s tip for buyers. Don’t get an adjustable mortgage. Most ARM’s have a start rate near that of the conventional 30 year fixed mortgage. This means there is little advantage to the average buyer to use an ARM.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

Jim Little, Your Sun City Realtor

If you like many others believe you have to be 55 years old to live in an active adult community, have I got news for you.

Both Sun City Grand, and Westbrook Village have lower age restrictions. You may buy a home and live in it at age 45 in Sun City Grand. Homes for sale in Sun City Grand range from $129,000 to $889,000.

Westbrook Village has an even lower age limit. You can buy a home and live in it in Westbrook Village at age 40. Homes for sale in Westbrook Village range from $149,000 to $539,000.

How can these communities do this? The federal rule is that 80% of the homes have at least 1 occupant over 55 years old, and no occupant under 19 years old for longer than 90 days. If the bylaws of the community allow it, and the community governing body will keep the records, households can be allowed occupancy of younger people up to 20% of the total. The key is keeping records, which Sun City Grand and Westbrook do.

Think about it, you can enjoy the benefits of active adult community living while you are still young enough to enjoy it.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

Jim Little, Your Sun City Realtor

This house for sale is a 1700+ square foot Wilmington model, one of Del Webb’s finest homes in Sun City’s Phase 3. It is located on a quiet cul-de-sac and features a larger lot. The home is 2 bedroom, 1.75 bath with formal living room and formal dining room. It has a screened patio and an eat-in kitchen. Offered for sale at only $185,000.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

>About The Author

As a full time agent with Ken Meade Realty a Sun City neighborhood Brokerage business, Jim utilizes his Marketing Degree and 35 years of Business and Real Estate experience in order to help clients with their primary residence and second home needs. He contributes to a daily Web Blog which focuses on the Sun City, Sun City West, Glendale, Peoria and Surprise Arizona Real Estate Market, as well as other topics important to those and neighboring communities. For more information on Jim and Ken Meade Realty, please visit his website at http://www.suncityneighborhood.com/ or his other blog at:http://activerain.com/blogs/jlittle

If you like many others believe you have to be 55 years old to live in an active adult community, have I got news for you.

Both Sun City Grand, and Westbrook Village have lower age restrictions. You may buy a home and live in it at age 45 in Sun City Grand. Homes for sale in Sun City Grand range from $129,000 to $889,000.

Westbrook Village has an even lower age limit. You can buy a home and live in it in Westbrook Village at age 40. Homes for sale in Westbrook Village range from $149,000 to $539,000.

How can these communities do this? The federal rule is that 80% of the homes have at least 1 occupant over 55 years old, and no occupant under 19 years old for longer than 90 days. If the bylaws of the community allow it, and the community governing body will keep the records, households can be allowed occupancy of younger people up to 20% of the total. The key is keeping records, which Sun City Grand and Westbrook do.

Think about it, you can enjoy the benefits of active adult community living while you are still young enough to enjoy it.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate, please call me with their name and phone number. Thank you!

Surprise! A city did grow here. And a fast growing city it is also. Recent figures released by the U.S. Census Bureau say that between the year 2000 census, and the 2006 revised estimate that Surprise grew over 177%, from 30,918 people to 85,914. John Hagen of the cities economic development department estimates that population is now over 100,000. He also states that the city leads the country in job growth.

Opportunities abound in Surprise, whether you are looking for a home to raise a family, or a place to start a business.

For more information on homes and condos for sale in Sun City, Sun City West, Surprise or Peoria Arizona or the greater Phoenix and west Maricopa county areas, please visit either of my web sites http://jclittle.com or http://suncityneighborhood.com. You may search the MLS free and with no registration required.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate, please call me with their name and phone number. Thank you!
See my other blog at: http://activerain.com/blogs/jlittle