Interest Rate Adjusts during the life of the loan
What is an Adjustable-Rate Mortgage? Adjustable-rate mortgages, also referred to as ARMs, have an interest rate feature that adjusts, or “resets”, at certain intervals during the life of the loan. These adjustments may start as soon as 1 year, or as long as 10 years after your loan closes.
When is an Adjustable Rate Mortgage the Best Choice?
- If you prefer a slightly lower interest rate during the initial years in your new home
- If you believe your household income will increase in the future
- If you plan on moving houses or locations in the next few years.
How does an ARM compare to a Fixed Rate Mortgage?
Typically, ARMs offer lower initial interest rates than fixed-rate loans. Fixed rate loans offer the security of knowing your interest rate with little or no variance over the years. ARMs offer you a lower interest rate that allows you to save money. However, your interest rate may go up when it’s time to adjust your rate.
What does it mean that my loan can adjust?
Initial ARM payments will have a fixed rate for a period of 1 to 10 years, depending on the loan program chosen. Depending upon the loan term chosen, after that time period has expired, your interest rate will be adjusted by adding a pre-determined margin to a financial index like Treasury bills, LIBOR (London InterBank Offered Rate) or COFI (Cost of Funds Index).
Directors Mortgage offers a variety of Adjustable-Rate Mortgage options:
FHA Home Loans
A FHA loan offers lower down payment options starting at 3.5% and flexible qualifying guidelines.
Jumbo Home Loans
A Jumbo loan is any home loan over the conventional loan limit, which is currently $417,000. Jumbo loans can also help you buy a bigger, more luxurious home.
VA Home Loans
Directors Mortgage has programs available to Military veterans and to those actively serving. These loans offer lower interest rates, closing costs and the potential for a no down payment option. (For this option to be eligible, the serviceman or woman must not have used their Full Entitlement yet. (VA loan entitlement).
Not sure which loan is right for you?
Contact a Directors Mortgage Specialist today for more details on our Adjustable-Rate Mortgages.