Adjustable-Rate Mortgage Services

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It can be time-consuming to search for the perfect house to call home. As you begin your journey towards home ownership, it can be difficult to think of anything else. Stephanie, the Queen Bee of Mortgages, offers a variety of home loan program options to suit your individual situation, current life, and future goals. You don't have to worry about adjustable-rate mortgages or whether you meet the criteria. 

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Adjustable-Rate Mortgage Basics 

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An adjustable-rate mortgage (ARM), is a home loan that has an interest rate that can be fixed for a certain amount of time and then resets and adjusts periodically according to the terms of the loan - put simply, that is what makes an adjustable-rate mortgage. There are adjustable-rate mortgages with a fixed term of 5, 7, or 10 years in which the rate will be higher if the loan term is longer. Adjustable-Rate Mortgages can be purchased with terms ranging from 10 to 30 years.

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Adjustable-Rate Mortgages have interest rate ceilings (the highest or maximum rate that you can pay) as well as floor interest rates (the lowest rate you can afford). These are often referred to collectively as "caps." Both you and your lender are protected by Adjustable-Rate Mortgage caps. Lenders are protected from loan losses if the index drops dramatically. The ceiling is the maximum rate a borrower can afford to pay on a mortgage.

 

This protects you against paying an exorbitant rate if the index goes up suddenly. To protect both lenders and borrowers against foreclosures, the borrower must be able to afford the highest payment. An Adjustable-Rate Mortgage loan may not be available to borrowers who have higher debt-to-income (DTI) ratios.

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When an Adjustable-Rate Mortgage Might Make Sense for You 

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When the interest rate is higher than it was in the past, and the rates are expected to fall in the near future, adjustable-rate mortgages can be a benefit to the borrower. If rates are already low, however, you might want to consider a fixed rate mortgage as your first choice.

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Fixed-rate mortgages start at a lower rate than adjustable-rate mortgages. The adjustable rate may not be able to adjust if you are unable to retire or have to pay off your mortgage quickly.

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If you need to move often or plan to sell your home within the next few years, Adjustable-Rate Mortgages can be a great option.