What is an Adjustable-Rate Mortgage?
Adjustable-Rate Mortgages (ARMs) are ideal for borrowers searching for a lower initial interest rate or a borrower who plans on selling the property or refinancing in the near future. Traditions Mortgage offers a wide range of adjustable-rate mortgages with interest rates that are fixed for periods of one, three, five, seven or 10 years. Annual caps and lifetime caps protect the borrower from large interest rate adjustments.
Adjustable-Rate vs. Fixed-Rate Mortgages
A fixed-rate mortgage retains the same interest rate for the maturation of the loan. The interest rate will remain the same regardless of the lifetime of the loan, which are usually terms of 10, 15, 20 or the traditional 30-years. ARMs can fluctuate depending on market conditions and the economic climate over time. Our adjustable-rate mortgages provide fixed rate options for the first one, three, or five-year period. This means that the rates will remain the same for those durations of time, then the rate will adjust to the standard market rate.
The mortgage that’s best suited for you will depend on the benefits you seek from your loan.
Is An Adjustable-Rate Mortgage Right for You?
Just like the ideal home style varies from homeowner to homeowner, the best home loan will depend upon your specific needs, desires and future plans. An ARM may be best if any of these apply to your current financial situation:
- Anticipated Increase in Income: While fixed-rate mortgages provide the certainty of a consistent interest rate, they often come with a higher rate than that of the initial ARM rate. If you are forecasting an increase in income, an adjustable-rate mortgage provides you with lower payments now and potential increases in rates when you may be better equipped to manage them.
- Desire to Move in the Near Future: Generally speaking, a fixed-rate mortgage is ideal for borrowers who have found a home they intend to keep until their loan is paid-in-full. If you don’t plan on holding the loan or staying in the property for very long, an adjustable-rate mortgage may be best suited for you since initial interest rates are often lower.
- A Yearning for Flexibility: There are many factors to consider when choosing which mortgage product is right for you. An important one is the economic climate and how it’s expected to change over the life of your loan. If forecasts predict lower rates, an ARM may be ideal. Remember, always review loan options with a trusted financial advisor or one of our local Mortgage Originators before making a decision.
Your Local Mortgage Lender in Central PA
At Traditions Mortgage, we are dedicated to assisting our customers with the home buying and refinancing process. If you feel that a adjustable-rate mortgage is best for you, call one of our local mortgage originators today.