Understanding Adjustable-Rate Mortgages (ARMs): Is This the Right Loan for Your Homeownership Goals?

Navigating the landscape of home financing options involves understanding various loan types and how they might fit your personal financial strategy. One such option is the Adjustable-Rate Mortgage (ARM), which can offer a distinct set of advantages for certain borrowers.

What is an Adjustable-Rate Mortgage (ARM)?
Unlike a fixed-rate mortgage where the interest rate remains constant for the entire loan term, an Adjustable-Rate Mortgage (ARM) features an interest rate that can change over time. Our new 7/1 and 10/1 ARM programs are structured to provide a blend of stability and flexibility:

• Initial Fixed-Rate Period: For a defined initial period—7 years for a 7/1 ARM or 10 years for a 10/1 ARM—your interest rate remains constant. This provides a predictable monthly payment during this timeframe.
• Subsequent Adjustments: After the initial fixed period concludes, the interest rate will adjust periodically, typically once per year (indicated by the "1" in 7/1 and 10/1). These adjustments are tied to a specific financial index plus a set margin.

• You Seek Lower Initial Monthly Payments: ARMs often feature an initial interest rate that is lower than what you might find on a comparable 30-year fixed-rate mortgage. This can translate into reduced monthly payments during the initial fixed period, potentially freeing up cash flow for other financial priorities.
• You Anticipate Relocating or Selling Your Home: If you foresee moving, selling your property, or refinancing within the next 7 to 10 years, an ARM allows you to capitalize on the lower initial interest rate without being significantly impacted by potential rate adjustments later in the loan term.
• You Expect Future Income Growth: For borrowers who anticipate a substantial increase in their income in the coming years, an ARM can offer immediate payment relief, with the confidence that future income growth will help manage any potential rate adjustments.
• You Prioritize Financial Flexibility: Lower initial mortgage payments can provide more disposable income that can be allocated towards savings, investments, or accelerating the payoff of other debts.

• Competitive Interest Rates: Benefit from potentially lower initial rates compared to traditional fixed-rate options.
• Flexible Loan Purposes: Our ARMs are available for:
  • Home Purchases: For acquiring your primary residence or a second home.
  • Rate/Term Refinances: To optimize your existing mortgage by securing a potentially lower rate or adjusting the loan term.
  • Cash-Out Refinances: To access your home equity for other financial needs, such as home renovations or debt consolidation.
• Low Downpayment Options: We offer financing up to 95% Loan To Value (as little as 5% down) for primary residence purchases or rate/term refinances, making homeownership more accessible.
• Broad Property Type Eligibility: These programs apply to standard property types, including single-family homes, Planned Unit Developments (PUDs), and 1-2 unit condominiums.