Adjustable-Rate Loans

By Xavier Flores in Blog.

If you’re in the market for a new house, you’re probably in the market for a new mortgage. When considering your financing options, you’ll want to review many different things about the loans offered to you. There are many different kinds of home loans available and understanding what you are offered by a lender is critical to knowing whether or not that financing option will work for you.

Adjustable-Rate Loans (ARMs), also known as variable-rate loans, often offer a teaser rate for the initial period of the loan. This introductory interest rate is usually lower than rates offered for fixed rate mortgages. The interest rate will fluctuate over the life of the loan based on market conditions. Changes in rate happen at certain time periods, and the lender can set both a maximum and minimum on the rate of fluctuation.

An ARM could be a good financing option if:
-ARM interest levels are significantly below fixed-rate interest rates.
-You don’t plan on staying in the house for more than five years (especially if you have a locked-in rate for the first three, five, or seven years).

Watch out for ARM offers if:
-Initial rates are comparable to fixed-rate loan rates
-High closing costs on these loans offset the low interest rate

Call me today to learn more about how to investigate what kind of financing will work best for your personal situation. I’m always happy to help.