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When interest rates on fixed-rate mortgages start climbing, loan officers may suggest an adjustable rate mortgage, or ARM loan. You'll be qualified on the basis of the first year's mortgage payment—usually lower on ARMs than on fixed-rate loans.
With an ARM loan, you'll need to keep an eye on your monthly house payment amount since it will change from time to time based on the terms of the loan program. The payment change is based on a recalculated interest rate that is tied to an index.
You'll want to look at the annual and lifetime caps for each program (the highest adjustment that can be made for that period) and whether the loan converts from an adjustable rate to a fixed rate after a certain period of time.
Because of their flexibility, ARM loans have helped thousands of home buyers qualify for financing or buy a larger home. But rates change daily, so now is the time to look and compare. Contact Us to find out more about adjustable rate mortgages.
At Rochester Mortgages we strive to make the mortgage process as fast and easy as possible. Click HERE for your FREE mortgage consultation.
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