Adjustable Rate Mortgages

Are Adjustable-Rate Mortgages Making a Comeback?


Homebuyers have had a rough time lately. First, the frenzied housing market stymied so many offers and caused frustration due to lack of
inventory. Now that the pace and prices are starting to drop, interest rates have ticked up to alarming levels. While some buyers are postponing their purchase, those still in the market are starting to consider more creative financing, including an ARM (Adjustable-Rate Mortgage).


What is an ARM?
Unlike a 30-fixed mortgage, as the name suggests, the interest rate of an ARM can change over the course of the loan. The interest rate is based on an index, such as the one-year T-Bill. Additionally, the timing of adjustment is fixed in the loan documents, so the borrower knows how to plan for changes. For example, a 5/1 ARM means that the initial interest rate is fixed for the first five years and then can adjust once a year for the remaining 25. Likewise, a 7/1 ARM has a fixed period of 7 years. There are also built-in protections to ensure that the adjustments are reasonable. 
These are limited to how high an adjustment (or reduction) can be assessed at each point and an overall cap on the interest rate.
The advantage of an ARM is to allow more buying power to buyers by starting with a lower interest rate than that available in a 30-year fixed loan.
This can be especially valuable for buyers who do not intend to keep the home for 30 years; they can tailor the adjustments based on their planned time to own the home.
The housing market is shifting. Homebuyers may not have the same challenges as last year, but today’s market presents new issues. One tool is an Adjustable-Rate Mortgage and with ever-higher interest rates, this mortgage product may be making a comeback.

If you are thinking about buying, there are so many more options as far as loan programs you can choose from. 

If you want more information about this and other loan programs, fill the form below and we will have out Loan Specialist contact you shortly!

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Buyer Resources

5 Homebuyer Tips
Here are five tips for navigating the home buying process.
3 Financing Tips
If you are planning on buying a home using a home loan then these three tips will help you get prepared for the financing process.
Credit Score Ranges & Factors
A credit score is a number between 300–850 that depicts a consumer's creditworthiness.
Required Mortgage Documents
Every lender requires documents as part of the process of approving a mortgage loan. Here are documents you’re generally required to provide...
How to Improve Your Credit
Credit scores play a big role in determining whether you’ll qualify for a loan and what your loan terms will be.
The Home Inspection Process
After your offer gets accepted, you’ll have an inspection period. This is your opportunity to have a licensed inspector canvas the home looking for common issues prior to moving forward with the home purchase.
The Appraisal Process
Once you are under contract, your lender will send out an appraiser to verify the purchase price is in line with the property’s value. Here are the two most important things to know about the appraisal process.
Homeowners Insurance
A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing.
How To Buy in a Tight Market
Here are five things tips that can increase your chances of getting your dream house in a competitive housing market.
Is the Buyer Pre-Approved, or Not?
When selling a home, it’s important to understand the different types of loan approvals that you will come across.
Your Cooper City Specialist
We are The Chenore Group and WE are COOPER CITY! Ben Schulman and Reute Sagee are Cooper City SPECIALISTS! They live, work and play in the city and know all that it has to offer! Every Cooper City neighborhood is unique and offers differing options in floorplans, models, and amenities. FAMILY is what this city is all about and FAMILY is what Ben and Reute are all about...Cooper City offers great schools, shopping, parks, and places of worship. Rely on them to help YOUR Family find a place to call home in
Hurricane Season - The "BOX", What Does This Mean?
The Hurricane BOX... What does it mean and how does it affect your real estate transaction? Jeff has some crucial information that you might find useful during hurricane season!

Post a Comment