Adjustable-Rate Mortgage

One type of mortgage loan with a changing interest rate is called an adjustable-rate mortgage (ARM). This type of loan goes by a few names: variable rate mortgage and floating rate mortgage. It is a type of mortgage in which the interest rate may change regularly depending on the performance of a specific benchmark index. This means that your regular payment amount could go up or down. Remember that most adjustable-rate mortgages (ARMs) limit how much the interest rate or payments can go up each year or over the loan period.

Initial interest rates on ARMs are usually lower than those of fixed-rate mortgages, and they remain that way for an initial period. After the initial few months or years, the interest rate applied to the outstanding balance is changed regularly, usually once a year but sometimes more frequently.

Borrowers who intend to keep the loan for a short time and can afford to absorb any increases in the interest rate may benefit financially from choosing an adjustable-rate mortgage (ARM). An adjustable-rate mortgage (ARM) could be a good choice if you intend to move or refinance before the end of the initial fixed-rate period and before the ARM's higher interest rate kicks in.

WHO CAN BENEFIT FROM AN ADJUSTABLE-RATE MORTGAGE?

Those who are likely to move frequently or are making their first home purchase can benefit significantly from an ARM. When buying a property other than your primary residence, an adjustable-rate mortgage (ARM) can help you save money by letting you get out of a high monthly payment during the fixed-rate period.

BENEFITS OF ADJUSTABLE-RATE MORTGAGE:

Low Initial Interest Rates
Interest rates are typically lower at the beginning of a loan's term, allowing borrowers to put more of their monthly payments toward principal.

Interest Limit
Rates of interest are capped at a certain level.

Flexibility
An adjustable-rate mortgage (ARM) could be a good fit if you anticipate a change in your financial situation within the next few years, such as a job transfer or the sale of your home. Before the ARM enters its less stable variable phase, you can take advantage of its fixed term and sell it.

Potential Decrease in Payments
If interest rates are falling and the index on which your ARM is based drops, it's possible that your monthly payment will go down as well.

Finding Your Lender

If you're trying to get a mortgage on your home, hiring a knowledgeable real estate agent who can advise you and help you every step of the way is a good idea. Our professional real estate agents will not only provide you with first-rate service and help you through the required steps, but they will also advise you on how to make the most of your options and determine the best fit for your needs. Don't be extremely hesitant to get in touch with us if you have any further inquiries or would like more information about the scope of our offerings.