An Adjustable Rate Mortgage (ARM) is a mortgage where the homeowner or borrowers monthly payments can move down or up with the changes in the market’s interest rates. The appeal of ARM’s are that they typically start out affordable in the very beginning where the borrower can be guaranteed that their loan will be locked in for a fixed period where their loans interest rate will not change. Many homeowners and potential homeowners turn to Adjustable Rate Mortgages because, this gives them a great opportunity to refinance or get into the new home of their dreams.
Adjustable Rate Mortgage Good Or Bad?
If you ask any Orange County realtor for their opinion on ARMs, you will get many different answers. With interest rates being at historic lows right now, it would be foolish to consider an ARM. In 3-5 years (when most ARMs would adjust) it is highly likely that interest rates will be higher than they are now. Even if your rate is a tenth or two-tenths lower than a fixed rate right now, I can almost guarantee that by the time your rate is set to adjust, it will be higher than if you were to get a fixed rate right now. Many homeowners across the United States, over recent years, made the mistake of not being aware of what to really expect with an ARM before they chose this option and they paid for it by ultimately going into foreclosure, short sale or bankruptcy.
Better Options Available?
If you’re asking: “what other mortgage loan options are out there?” the answer to this question is positive, there are a wide variety of mortgage loan options available in this day and age, especially for 30-year and 15-year loans. With interest rates still at historically low levels, anyone who is planning on buying or refinancing an Orange County home should review all of the borrowing options that are available to them today.
To learn more about adjustable rate mortgages or to view the latest Orange County homes for sale, contact the experienced team of Orange County realtors at Fred Sed & Associates today by calling (949) 272-0125.