When To Consider An Adjustable Rate Mortgage

If you have heard the word ARM in the mortgage business I assure it doesn’t get followed with “and a leg” although many people feel that’s what it takes to get approved these days.  What it does stand for is “adjustable rate mortgage” and simply put, it is an interest rate that can adjust based on the lock in term.  In other words you can look at 1 year, 3 year, 5 year, 7 year and even 10 year terms.  Now this does not mean that your mortgage has to be paid off at the end of the term.  These mortgages are still usually amortized over a 30 year period still giving you a manageable mortgage payment, assuming you were properly qualified by your mortgage broker.

Most if not all of these ARM’s have annual and lifetime caps meaning they adjust based on margins and the index they are tied too.  Without getting to complicated let me just say that for the most part these loans are excellent choices for the individual that is pretty sure they will stay in their home for at least the term.  Statistics have shown that a mortgage usually stays in place anywhere from 5 to 7 years, making these ARM’s worth considering.  Today’s adjustable rate mortgages are very attractive and may even be a full percentage point lower than the 30 year fixed interest rate.  Depending on the size of the mortgage, this could offer significant savings over the term compared to its 30 year counterpart. Like with any mortgage, you should get professional advice before you decide which loan best fits your financial needs. If you would like a confidential analysis of your income to debt ratios, or would like to discuss mortgage options please feel free to send me an email at john@centerpointemortgage.com.

Or you can visit us at www.centerpointemortgage.com/getpreapproved where we offer free pre-approval services.

Sincerely

John Milano
Mortgage Planner
CenterPointe Mortgage

Mortgage Broker -vs- Big Bank

If I had a dollar every time I was asked “why should I use a mortgage broker instead of my bank” I probably wouldn’t be writing this blog.  Now, you may think I am biased since I run a mortgage broker business but let me say “aha”  to you because in my 25 year career I have seen all sides of the mortgage business.  Starting as a Broker, moving to a Mortgage Bank following a move to what would be considered an S&L (your typical neighborhood savings and loan Bank) then to a commercial lender,back to a Mortgage Bank and eventually opening up a Mortgage Brokerage branch. So when the question comes in I am well prepared to answer it.  And the answer is (drum roll here)…… Broker, Broker, Broker.  Why? Because you will get better advice, pricing,and mortgage choices.  Now with that said, you should still call around and get recommendations from friends or family members (don’t always count on your realtor especially if their company owns or is affiliated with a mortgage company).  The industry calls that steering, I call it illegal.  Community Lenders and/or Banks have their place in the mortgage business especially when it comes to CRA (community reinvestment act) lending which are special programs that usually Brokers can not offer.  But if you are not eligible for those programs (and few are), I believe you will always save money using a Mortgage Broker and have better mortgage product options and mortgage planning advice.

If you would like to have a more personal discussion on this topic please feel free to email me at john@centerpointemortgage.com.