An Adjustable Rate Mortgage loan (ARM loan) typically offers better interest rates than a fixed rate mortgage, allowing you to save a substantial amount of money in interest. They also are riskier because monthly payments and interest rates can fluctuate from year to year. However, even with the added risk, an ARM loan could be the ideal lending option depending on your specific situation.
What Is an ARM Loan?
An adjustable rate mortgage loan is a home lending option where the interest rates fluctuate periodically over the course of the loan. Typically, the loan begins as a fixed rate mortgage for a set period, such as 5, 7 or 10 years. Once this initial period is over, the interest rates fluctuate on an annual or monthly basis. The change in the interest rate is based on the set margin and the current rate of the index specified in your ARM mortgage terms.
Is ARM Loan Right for You?
While an ARM loan is not right for everyone, it can be a great option in several situations, such as:
- Plan to Move Soon: If you plan to move before the end of the initial fixed rate mortgage period, then an ARM loan can be an ideal option because it offers lower interest rates.
- Plan to Pay Mortgage Faster: If you plan to make extra payments on your loan. The lower interest rates will save you money.
- Think Interest Rates Will Decrease: If you think the interest rates are likely to be lower at the end of your initial period.
- Future Income Growth - If you want low monthly payments now because you expect your income to increase by the end of the initial period.
Southpoint's Commitment to You
Southpoint doesn't just want to help you obtain a home loan. We want to help you obtain the home mortgage that is ideal for your specific situation. Our experienced loan officers will evaluate your specific goals and circumstances and help you determine if an ARM loan is the right option for you. You can opt for a 5-year ARM loan (5/1), 7-year ARM loan (7/1) and 10-year ARM loan (10/1).
Our team will walk you through the entire home lending process, so you know exactly what to expect at each step. We are always here to answer any of your questions and to make sure you understand all the details of your loan.
Learn more about ARM loans and find out if it is right for you by contacting our Southpoint Financial office, emailing us or completing an online contact form.