Adjustable rate loans (ARMs) are an attractive option for homebuyers or homeowners refinancing who want a low introductory rate. You can save a lot of money with an ARM loan versus a fixed rate loan.
But those rates don’t last forever. At Priva Mortgage, we want you to understand how ARM loans work and when they are most beneficial is important so you can make the right financial decision for your family.
The ARM introductory rate is what attracts most borrowers. The initial rate is usually much lower than fixed rates. This works well for buyers on a limited budget or anyone who knows their income will increase in years to come.
When your ARM loan adjusts depends on its terms. You can borrow an ARM loan with a fixed rate for 2-10 years. The shorter the fixed rate term is, the lower the introductory rate you’ll get.
After the introductory period, the rate adjusts annually according to its linked margin and index. For example, if your ARM is linked to the Prime rate with a 1% margin, your adjusted rate would be the current Prime rate plus 1%.
Even though ARM loans seem risky, there are many benefits including:
Many borrowers benefit from an ARM loan including:
ARM loans aren’t for everyone. If you’re thinking of staying in the home for the long-term or you can’t handle changing mortgage payments, an ARM loan isn’t the best choice
A fixed-rate loan can provide the stability you need whether you need predictability or you plan to stay in the home for the duration of the term. While you could save money initially with an ARM, the adjusted rate could be higher or lower than the initial rate, which is something long-term homeowners often don’t want to deal with.
At Priva Mortgage , we are here to help you make the most out of your mortgage. If you need an ARM loan to save as much money as possible right now, we have many options for you including various terms to make it the most affordable.
If you have an ARM loan now and want to refinance into a fixed rate loan, we can help you get a more predictable payment. Our mortgage professionals are here to listen to your financial needs and help you achieve them by getting you the mortgage that best suits your needs.