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Is an ARM Right for You?
Here’s everything you need to know about adjustable-rate mortgages.
Are adjustable-rate mortgages dangerous? Isn’t this the same type of loan that was so popular preceding the last recession? Yes, but they’re not scary once you fully understand them.
Adjustable-rate mortgages, or ARMs, work very well if you know the game’s rules. Think of playing a game of chess and not understanding the rules. The likelihood of winning would be very slim. The same mindset can be applied to adjustable-rate mortgages. Make sure you discuss your goals with your loan officer.
“Not understanding a few basic terms can put you in hot water.”
Adjustable-rate mortgages can become a much better deal for many buyers in certain markets. You may find a 30-year, fixed-rate mortgage to have better interest rates in other markets. For example, if the average American stays in their house for five to seven years, and if an adjustable-rate mortgage would give you a guaranteed fixed rate for 10 years at a lower interest rate of 0.25%, it may be worth looking at the adjustable-rate mortgage.
The problem most people have is not understanding all of the industry terminologies associated with their adjustable-rate mortgages. Not understanding a few basic terms can put you in hot water. Here are a few questions you are going to want to ask your loan officer:
1. What is the fixed period of the loan?
2. What is the maximum interest rate that could be?
3. What is my starting interest rate?
4. How frequently will that rate change?
These are just a few questions that can help you “ARM” yourself for success.
If you have any additional questions for me, don’t hesitate to reach out via phone or email today. I look forward to hearing from you soon.