Why would I want an Adjustable-Rate Mortgage?
An Adjustable-Rate Mortgage is a little riskier than a Fixed-Rate Mortgage, but works well for those who aren’t planning to stay in their homes for an extended period. Instead of agreeing to a fixed interest rate, you would pay interest rates as they fluctuate in the market.
What can I use an Adjustable-Rate Mortgage for, and what are my options for an Adjustable-Rate Mortgage?
This type of mortgage works out very well if interest rates drop during your mortgage period. If interest rates rise, then you could end up paying more than you would with a Fixed-Rate Mortgage. However, lenders do limit how much your interest rate can rise. Generally, lenders limit the increase potential to two points a year, and six points total for the lifetime of the loan.
Q: What lengths of time-periods are offered for repayment on Adjustable-Rate Mortgages?
Why should I get an Adjustable-Rate Mortgage?
An Adjustable-Rate Mortgage may prove beneficial if you can tailor it to your needs. For example, if your ARM has a quick reacting index, you can take full advantage of dropping interest rates.
You may also be interested in an Adjustable Mortgage if you want your first year of payments to be lower than following years. If you have any remodeling you want to do on your new home, this option may free up the cash you need to do so. However, always consider the ARM risk factor; your second year may have much higher interest rates than your first if the market goes up. The ARM risk factor can work for you too; if you plan to sell your home after a year or so, it may work out better for you to pay such low interest rates during the short time you own the home.
How can I get an Adjustable-Rate Mortgage?
You can apply for an Adjustable-Rate Mortgage with us. Click here to begin.
How can my FICO/Credit Score affect my mortgage rate?
Your Credit Score and FICO are important. If you score between 720 and 850 you are A-Paper, which means you have good credit. If you scored below 660, you will have trouble finding a lender. If you scored below 620, you are below the cutoff between A-Paper and Sub-Prime and Non-Prime Lending.
Do you know what your credit rating is? To see where your credit stands and learn about the type of loans you may qualify for, request a credit report.
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