If you have been around the mortgage merry-go-round for a while you may remember the ARM products that were so popular pre-2008. In the days since the 2016 Presidential Election we have seen 30-year fixed rates increase, as well we have seen the Federal Reserve announce more increases to the rates that mortgage investors follow. An Adjustable Rate Mortgage (ARM) is a loan product that allows the borrower to own a home and make lower payments on their home in the first years of the mortgage. After the initial introductory period, usually 5 years or more, the rate will adjust to a pre-determined scale. This adjustment is usually higher than the initial rate, but it is possible to adjust downward.
The stigma that surrounds ARMs relates to products that are now illegal to sell. Many borrowers did not understand what they were purchasing, and many lenders were all too quick to sell them. The ARMs of today are designed with features to help the borrower stay in her home.
Some of the benefits of an ARM are:
- Pay down your principal balance quicker
- Save cash for other investments or expenses
- Lower interest rates available with flexible payment options
An ARM is also a great option for borrowers who are not planning on staying in their home long-term. They can own the home for a short time and pay less money than a 30-year fixed.
What option is best for you? Call the professionals at Best Way Lending today and let us help you find it.