Orlando Mortgage Blog

ARM Loans...seriously?

February 10th, 2014 12:37 PM by BILL WILBANKS

HAVE YOU LOOKED AT ARM LOANS LATELY?

Adjustable Rate Loans are still viable solutions for many!
 
Yes, fixed rate mortgages remain the industry standard. But, we don't all drive mini vans do we? And tool boxes come in many shapes and sizes to fit all the different specialty tools we need to put in them. KEEP READING . . .
 
Fully amortizing ARM loans are just as viable an alternative today as they have been in the last three decades for the same rational financial reasons (these are not the negative amortization or no verification programs that have caused so many issues in the last several years). Here's why they still serve distinct purposes and do it very well:

Anyone wanting to Buy or Refinance a home today that expects to only stay in the mortgage for the next 5 to 7 years would most likely benefit from the lowest rate they can obtain on the new mortgage.
  • Lower initial fully amortized monthly payment than a standard fixed rate mortgage. That can help you buy more home or make refinancing viable for those wanting to make a real dent in their monthly expenses when a typical fixed spread may not make it worth your while today. 
  • Then there are real estate owners wanting to sell the current property later when the market has improved or want to take more time and not rush or quick-sale it inviting lowball offers. Then later on they may payoff all or part of the mortgage on the new home they purchased with the proceeds of the sale of the old one. In the meantime they want the lowest payment on the new purchase they can structure.

There are certainly many other examples.  These can be very viable options for anyone having a need for a mortgage for only five, seven, ten years or even less.

Still haven't gotten your attention yet?:

Example:  A $200,000 mortgage on an 5/1 ARM with a start rate of 2.75% reduces a like fixed rate (4.125% at press time) payment by $152.82 per month ($969.30 vs. $816.48) or $9,169.06 savings over the period of the initial 5 years. Even if you finally decide to stay on a traditional fixed rate product it's worth looking at the numbers. Reviewing your options to arrive at what's the right fit for you is a must in today's market. 

Posted in:General
Posted by BILL WILBANKS on February 10th, 2014 12:37 PM

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