Mortgage lenders post adjustable interest rates for refinancing with payment option ARMs for refinancing and home purchase financing to 100%. You can't afford to wait any longer to take advantage of today's interest rates. They're still historically low, and the time is now to remodel your kitchen, consolidate high-interest debts, or finally fund that dream vacation for your family. Hurry before it's too late, and rates return to normal!
Adjustable rate mortgages have a rate that remains fixed for a specific period of time and then begin to adjust periodically. This can be a great option for borrowers who feel that interest rates may decrease or that are planning to live in their home for less than five years. We can help you decide which loan is the right one for your specific situation. Get a no-obligation quote today!
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Adjustable Rate Mortgage FYI
When mortgage rates are rising, it seems counterintuitive to take out an adjustable-rate mortgage . But that's exactly what almost one-third of borrowers are doing.
Adjustable-rate mortgages , or ARMs , made up 32.7 percent of loan applications last week, according to the Mortgage Bankers Association. That was an increase over the previous week. Borrowers are flocking to adjustable rate mortgages even as the entire mortgage industry believes that rates will rise this year and next. The rates on today's ARMs probably will go up when the adjustment period rolls around.
Why, if rates are likely to rise, would anyone want to get an adjustable rate mortgages ? There are reasons, some of them good. The key is that adjustable rate mortgages have lower rates than fixed-rate mortgages. On a one-year adjustable rate mortgages based on the constant maturity Treasury, the rate typically is at least two percentage points lower than the rate on a 30-year fixed. Rates are almost as good on hybrid adjustable rate mortgages, which sport initial rates that last three to 10 years, then adjust annually after that.
For example, a 5/1 hybrid adjustable rate mortgages starts out with a rate that stays the same for five years, then adjusts every year thereafter. Rates on these loans generally run between 1 and 1.5 percentage points lower than rates on 30-year fixed mortgages.
These hybrid ARMs have become popular in the last few years as homeowners have learned to match their loan to the length of time they think they'll own their homes.
Key: How long will you stay?
"When I consult someone, I frequently ask them how long do they plan on staying in the home," says Bob Moulton, president of Americana Mortgage Group in New York. They always say they don't know, and Moulton presses further. How long did they live in their previous home? How long did they live in the house before that? Do they plan to have children? Will any children move out within a few years? Is there a possibility of a job transfer or a big pay raise in the next few years?
More often than not, Moulton's clients conclude that they won't stay in the house for the life of a 30-year, fixed-rate mortgage. A typical family stays in the house seven or eight years before moving on. So a typical family, in the opinion of Moulton and many other mortgage lenders, should get a hybrid adjustable rate mortgages.
Homeowners with adjustable-rate mortgages often refinance right back into adjustable rate mortgages, forgoing the opportunity to grab near-record low rates for fixed-rate loans. Moulton says a client of his got a 5/1 adjustable rate mortgages in February 2003 because she intended to sell the house within five years. She called Moulton a few weeks ago to say that her plans had changed, and that she wanted to keep the house a year or two longer than she originally intended. "So I refinanced her into a seven-year adjustable rate mortgages vs. the four years she had left on her five-year adjustable rate mortgages ," he says.
Think rates, not just payment
Many borrowers focus on the lower monthly payment at the beginning of an adjustable rate mortgages term and don't worry too much about what will happen if rates rise sharply in the future.
"Generally speaking, in a rising rate environment you're going to have more people refinancing into an adjustable rate mortgages," says Garrett Brief, vice president for product development for mortgage lender IndyMac Bank. "If they're looking to get cash out of their property and they still want to avail themselves of a low rate, the product that will allow them to do that is an adjustable rate mortgages."
That might sound backward to people who think of themselves as cautious with their money. If you get a fixed-rate mortgage while rates are low and rising, you're locking in a low rate for the life of the loan, whereas someone who gets an ARM risks rising rates and bigger payments in the future. But there's another way to think about it. Call it the Bird in the Hand theory: Get an adjustable rate mortgage and save money now when the savings are a sure thing.
The rock-bottom savings come with interest-only adjustable rate mortgages, in which the borrower pays only the interest and not principal. Interest-only adjustable rate mortgages are "a great idea for someone starting out," says Gary McCann, executive vice president for Astoria Federal Savings. "Hopefully, at one point in time, their income goes up and they can start paying toward principal."
But they're not such a good idea for people who lack the self-discipline or the income to make payments toward principal.
Most borrowers who get hybrid adjustable rate mortgages, whether or not they're interest-only, plan to either move out of the house or refinance before the fixed-rate period expires. But if they keep the loan until the rate adjusts, they get one to four months' notice of what their new interest rate and payment will be.
Benefits of Adjustable Rate Mortgage Loans
- Record Low Rates
- Lower Rates can Save You Money
- Interest Only Loans offer Lower Payments
- Tax Deductible
- Cash Out Loans
- 100% Financing Available
- 1st Time Homebuyers OK
- Poor Credit OK
- No Verification Income Loans
- Self Employed Borrowers OK
- Interest Only Loan Options
How to find the best Adjustable Rate Mortgage Loans
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