What is an Adjustable Rate Mortgage Loan?
If this isn’t going to be your home forever, an ARM loan could be right for you.
I want to buy a home, but I don’t plan to stay for too long.
An adjustable-rate mortgage (ARM) may be what you’re looking for. ARMs have an introductory interest rate that is fixed for a set period of time and then adjusts for the duration of your loan. If you plan to move or refinance before your initial mortgage rate adjusts, this loan could be right for you. One advantage to an ARM loan over a conventional fixed-rate mortgage is that initial ARM interest rates are usually lower.
Benefits of an adjustable-rate mortgage loan:
If you are going to move again in 10 years or less, lock in your rate for 3, 5, 7, or 10 years.
Initial ARM loan interest rates are usually lower than interest rates on fixed-rate mortgages.
Low interest rates may mean qualified borrowers can buy a higher priced home with a more affordable monthly payment.
Interest rates are fixed for the set period of time you’ve chosen. When they reset, there are caps in place to limit any increases.
Let’s dig a little deeper – who is eligible for an ARM home loan:
With lower interest rates during your initial fixed-rate period, you can keep a little more cash in your pocket. Who wouldn’t benefit from lower monthly payments? Do you think this loan program checks all the boxes? Before getting into the nitty-gritty, it’s important to know who these loans are best for:
- You understand your rate may increase after the initial period.
- You expect your income to increase over a couple of years.
- You don’t plan to hold the property for longer than your fixed-rate period.
- Still not sure if you qualify? Call a mortgage advisor today at 1-844-77-vLoan to help match you up with your perfect fit.
Requirements and facts for an ARM loan:
- Our Adjustable-rate mortgages have caps that limit how high your interest rate can go at each rate change. Risks are limited and you know what they are in advance!
- During the initial fixed period, your interest rate and monthly principal and interest (P&I) won’t change. However, once the introductory period is over, your rate can adjust annually.
- You can prepay your mortgage without penalties.
The nitty-gritty about ARM loans:
- Early in the loan term, ARMs generally offer lower interest rates, which means lower monthly payments compared to a traditional fixed-rate mortgage. Keep some cash in your pocket or savings account for other expenses.
- You can make payments comparable to rent, but instead of throwing money at your landlord, you’ll be building equity while you invest in your dream property.
