Convertible home mortgages, the power of choice.
Convertible home mortgages refer to a type of HELOC mortgage. These mortgages are a real alternative to the mainstream options which are generally on offer at banks and finance companies.
HELOC mortgages stand for home equity lines of credit. These mortgages are based on the equity of a home. Home equity lines of credit (HELOC) mortgages have the benefit that you purchase a line of credit that you can choose when and how to use. Mortgages are generally linked to a specific purchase but with home equity lines of credit you have more flexibility of choosing how much you want to borrow at a certain time. With home equity lines of credit you only pay for the capital you choose to withdraw from your line of credit.
HELOC mortgages are linked to the prime interest rate. In the States this is tied to the Fed-funds rate that dictate the rates of interest for short term loans like HELOC’s, credit cards and other short term loans. HELOC’s are based around to factors, line amount and draw amount. Line amount is the maximum amount of money you can borrow. Draw amount is the initial capital you borrowed.
Payments on HELOC’s are very flexible. The minimum payments for the first 10 to 15 years are set as interest only. You have the choice to either only pay the interest to keep the line of credit accessible or pay down the line month by month.
Home equity lines of credit have now a further point of choice with convertible home equity lines of credit. These convertible loans allow the borrower to change their home equity line of credit from variable to fixed rates of interest. This change can be done once or more times during the life of the mortgage.
As mentioned above the rate of interest of home equity lines of credit is set by the prime interest. If you convert it to fixed interest it will allow you to further manage the payments of your mortgage.
Borrowers often use house equity lines of credit as a second mortgage to pay for unexpected expenses or for luxuries instead of a credit card that has much higher interest rates. However the conditions are becoming so good that qualified borrowers are deciding to use them as primary mortgages.
In a nutshell
Home equity lines of credit provide borrowers with a flexible and affordable finance option that can adapt to unexpected expenses and planned treats. The rates are much better than credit cards saving the borrower a lot of interest when compared to other short term loans. This control is further enhanced by the possible conversion from variable interest to fixed. If you have a house with equity on it have a look at the options you have to purchase a House Equity Line Of Credit. You might very well save yourself some money.

ARM home mortgage rates, the golden mean.
Our previous blog dealt with the advantages and risks of choosing a variable rate mortgage. That blog assumed some prior understanding of the types of mortgage rate available to borrowers. This blog will give some more basic and specific descriptions of these mortgage types with a special look at ARM or adjusted rate mortgages.
The term golden mean has an interesting origin in Greek philosophy and carries all kind of connotations in art, science and specifically in mathematics. There is not direct relationship with the mathematics behind home mortgages but it does convey the idea of happy medium, of a balanced choice. It was used for instance to provide a pleasing and balanced proportion to things. In fact the “perfect” human body was worked out as a proportion of the head and the “golden mean” which is a number close 1.6.
Is this the case with mortgage and ARM rates? As usual a lot depends on your personal circumstances and attitudes. This article will attempt to explain what the best options might be for some of the most usual scenarios.
So what is an ARM mortgage rate?
As we mentioned before ARM, stands for adjusted rate mortgages. To really understand what this means it is probably easier to explain how fixed rate mortgages and variable rate mortgages work.

First of all what is the rate of interest for loans. It is a rate set by the government, setting the price to borrow money. Banks and lending companies use this rate as a baseline and add their own percentage to cover expenses and profit margin.
Fixed rate mortgages are mortgages on which the rate does not change throughout the whole loan. You know exactly what every monthly payment is going to cost you. This allows you to budget for years on end. It also guarantees the rate will never increase beyond what you have decided you can afford. The only disadvantage of this mortgage rate is that in order to protect themselves from changes in the rate banks must increase the rate of fixed rate mortgages making them more often than not more expensive than variable rate mortgages.

Variable rates change as the rate of the country changes. These mortgage rates are generally the cheapest but you do carry the risk of rates increasing so much you can’t afford your home. It is all a bit of a gamble.

Adjusted rate mortgages on the other hand combine both types of mortgage. For a fixed time, say five or three years, the mortgage is fixed at a set rate. After that time is over the mortgage “adjusts” to a variable rate.
This has various benefits. If you are planning to sell the house in the short term having an ARM might provide you the benefits of a fixed rate mortgage without having to pay so much for it.