Do you know what you need to know about ARMs?
Adjustable-Rate Mortgages, or ARMs, are mortgages that have a changing interest rate. Unlike fixed-rate mortgages, you need to do a bit more planning to accommodate the changing monthly payments associated with ARMs. Today we’re going to be talking about everything you need to know about a potential or existing Adjustable-Rate Mortgage. Let’s take a look.
How do Adjustable-Rate Mortgages change?
The rate of interest on ARMs changes according to a common, benchmark index and a margin. This index is clearly defined in your contract, so make sure you make a note of it. Your contract will also let you know when changes in your interest will be taking place as well as what your limit is on the amount of interest that can be adjusted periodically. Some of the most popular indexes that your ARM might draw from are the prime lending rate, the federal funds rate, the 10 Year Treasury Security, and the Discount Rate. To learn more about these indexes, you can contact us to help you navigate them!
What are the advantages of ARMs?
Though the adjustable rate is risky due to the fact that it can increase, it can also save you money by lowering. Adjustable-rate mortgages are often cheaper for homeowners that aren’t planning on staying for the long-haul in their homes. After all, the first 5 years of a hybrid loan like the 5/1 ARM come at a fixed rate without a premium that comes with a true, fixed-rate mortgage. Not only that, but if you expect your income to increase, or for some reason, you think that you can handle higher payments in the future, then you may benefit. Adjustable-rate mortgages are best suited to those who can handle higher payments and those who keep strict control over their finances. They’re also great for home owners that can take advantage of the lesser payments to start.
Contact Caliver Beach when your finances are ready to move on a new home!
Whether you’re looking for a house to flip or a home to love, finding the money for this investment can be difficult. We at Caliver Beach are ready to help you find the right loan for your situation. Our team of highly qualified experts have hundreds of options ready for you to invest in the home of your dreams. Contact us today! You can also follow us on Facebook, Twitter, Google+, Pinterest, and Youtube!