• Darren Ferlisi
    Mortgage Loan Originator
    NMLS ID# 139611
    Office Phone: (240) 415-5015
    Cell Phone: (301) 448-0749
    Email: dferlisi@ihmcloans.com

  • Adjustable Rate Mortgage

    October 2, 2013
  • What is an adjustable rate mortgage loan?

    Another name for an adjustable rate mortgage loan is ARM. The two most basic conventional mortgage loans are the ARM Loan and  the fixed rate loan. Conventional loans such as these, often feature a lower interest rate than FHA loans, VA loans, jumbo loans or USDA loans.  ARMs or "variable rate mortgages", usually specify limits as to how high or low the interest rate can go, and how frequently the changes can be made. 

    Businessdictionary.com defines an ARM loan as: “A real estate loan in which the interest rate is periodically adjusted up or down to reflect the current market rates. 

     

    Reasons to choose an adjustable rate mortgage:

    With an adjustable rate mortgage loan you will receive a lower initial interest fixed-rate.These initial rates range from 3 to 10 years. When this initial fixed-rate period ends, the interest rate will change annually. ARM loans are recommended for people who aren’t planning to stay in their home forever. Borrowers can sell or refinance their home before the initial period ends. ARM borrowers can save money if their initial interest rate is low. They can also choose to stay in the home and refinance at a low rate. Though it can be a risk, for some, an adjustable rate mortgage loan is a perfect solution.

    Adjustable rate mortgages can be offered in either a 30 year loan or a 15 year loan.

     

    30-year loan:

    • more common
    • lower monthly payment
    • more interest over the life of the loan.

    15-year loan:

    •  offers a lower interest rate
    •  less interest over the life of the loan
    •  monthly payments higher. 

    If you have any questions and/or want to learn more about adjustable rate mortgages, contact us today.