Deciding on a mortgage? David Frank can help you determine your best course for financial lending.
A fixed rate mortgages offer stability and predictability, however an Adjustable Rate Mortgage (A.R.M.) can offer borrowers significant savings as well as flexibility when qualifying. Gone are the toxic, misused ARM loans that have been blamed for much of the housing crisis.
Today's ARM loans have morphed into more viable and safer options, providing added protection for the consumer. Most ARMs now offer 'Hybrid ARMs' that include an initial fixed rate period ranging 3, 5, 7 or 10 years before adjustment.
This is the most important question when determining which loan is right for you. Fixed rates are generally more expensive with higher rates so if you only plan on owning the property for a limited time (up to 10 years) then an ARM might with a fixed rate period that matches your timeline could be right for you.
Considering the rate climate is important. If you are in a low rate environment then most likely the ARM loan will have upward adjustments, but in a high rate environment the future adjustments could lower the rate (even without refinancing).
Adjustable loans will do just that - adjust. Making sure your income will keep pace with future adjustments will be key when deciding if an ARM loan should be considered; If not, fixed rates will provide more security and peace of mind.
Do the math; if an ARM rate is enough lower than the fixed rate then there may be a simple math case to make on choosing and ARM vs Fixed.
If your earnings are likely go up then an ARM loan may allow you to qualify for a larger purchase upfront because of the lower rates offered. This will also protect you against price appreciation of homes in a rising value market.
Not all mortgages are created equal and understanding your options requires that you work with a certified mortgage professional who can help you successfully navigate the process. Call 949-374-0421 and let David Frank help you create a financial package that best fits your needs.