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
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