Shopping for a home in Pennsylvania?
The Pennsylvania Adjustable Rate Mortgage might be a viable way of financing that will make a home affordable both now and in the years to come.
Pennsylvania Adjustable Rate Mortgages (ARM’s) operate on the basis that interest rates paid at the outset of the loan are adjusted at fixed times according to variations in a particular index. Interest rates can be adjusted at one year or after five years, for example, based on the terms and duration of the loan.
Several indexes (which are also variable) are used for home mortgage loans. Pennsylvania Adjustable Rate Mortgages utilize reputable indexes, assuring the borrower that conditions of the loan will work to his/her benefit. Interest and index caps protect consumers by preventing these rates from skyrocketing to a point of no return.
Pennsylvania Adjustable Rate Mortgages present distinct advantages, chief among them lower interest rates associated with the first period of an ARM. Lower interest rates at this phase add up to more money applied to the principle and allow the homebuyer extra cash for other costs associated with purchasing a home.
The downside here is increased monthly payments that are inevitable in the later phases of the loan. A 30 year Pennsylvania Adjustable Rate Mortgage may require greatly increased or balloon payments and plans should be made to compensate for the additional funds needed. Borrowers should anticipate monthly payments according to the possible increase of the interest and index rates at the time of future phases. An increase such as this should not be a problem for borrowers who expect an increase in income and will easily be able to afford the payments.
Although Pennsylvania Adjustable Rate Mortgages have interest rates typically two or three points less than fixed rate loans, it is wise to carefully study all terms of the loan agreement to make sure other factors do not counteract that advantage.
Other options are available with a Pennsylvania Adjustable Rate Mortgage – the Option ARM being one of them, featuring the advantages of a standard ARM along with flexible choices for each monthly payment.
At Ivy League Mortgage Southampton, our dedicated and knowledgeable loan officers are available 24/7. Visit us online at www.ilmsouthampton.com and let us help to discover the best financing options for you.