1 / 4

When An Adjustable-Rate Mortgage Makes Sense

Thereu2019re a lot of things that need to be considered when you are planning on buying a new home u2013 the location, style of the home, new vs. old and more. But debatably one of the most important aspects of buying a house is the process of acquiring a mortgage, and there are two main financing options for you to choose from u2013 fixed-rate and adjustable-rate mortgages. Here, we will talk about the adjustable-rate mortgage.

yourcahome
Download Presentation

When An Adjustable-Rate Mortgage Makes Sense

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. When An Adjustable-Rate Mortgage Makes Sense

  2. There’re a lot of things that need to be considered when you are planning on buying a new home – the location, style of the home, new vs. old and more. But debatably one of the most important aspects of buying a house is the process of acquiring a mortgage, and there are two main financing options for you to choose from – fixed-rate and adjustable-rate mortgages. Here, we will talk about the adjustable-rate mortgage.

  3. What is an adjustable-rate mortgage (ARM)? An adjustable-rate mortgage is a loan that has a variable interest rate. With an ARM, the initial interest rate is fixed for a period of time, usually one or three years. After that, the interest rate applied on the outstanding balance resets periodically, at yearly or even monthly intervals. The rate changes based on market rates and can remain the same for an entire term, or be adjusted more frequently. Though ARMs may not be the best option for everybody, in specific scenarios, they could be worth considering. Listed below are a few cases, when an ARM might be a good fit for you: If you are going for a larger loan: A larger loan means you’ll pay more in interest and have higher monthly mortgage payments. Even if you have the same interest rate as someone with a smaller loan. If you use an adjustable-rate mortgage to secure a lower interest rate – even if it’s just for the introductory period – you could save a lot of money in the long run. Of course, this relies on how long you want to stay in the home prior to selling.

  4. If you don’t want to invest in a lifelong home: It could be risky to stay in a house for a longer duration with an adjustable-rate mortgage. However, if you just want to stay in the home for the ARM introductory period, or a little more than that, it could be beneficial. As stated, adjustable-rate mortgages usually have opening periods with lower fixed interest rates than usual thirty-year fixed-rate mortgage. But as soon as that introductory period is ended, your interest rate will slowly begin to match the market rates. Adjustable-rate mortgages are a reasonable alternative when mortgage rates are on the higher side. If you wish to explore your ARM options, feel free to get in touch with All California Lending – your one-stop low-rate mortgage lenders in Los Angeles County CA. Talk to us at (877) 462-3422!

More Related