Are you needlessly spending hundreds of dollars more each month than you need for your mortgage? I can help you lower the cost. Here's the scoop of adjustable rate mortgages.

The Option ARM is an alternative that combines the best of fixed-rate and adjustable rate mortgages,

While we have your classic 1- or 6-month adjustable rate mortgage product, a new breed of hybrid loans give many people lower interest rates that are fixed for an initial period of time, without the fire-drill exercise that people sometimes go through with balloon mortgages.

With these hybrid loans both the interest rate and monthly payment remain the same for a fixed period. The most common fixed periods are 1, 3, 5, 7, and 10 years. Unlike a balloon mortgage, at the end of the fixed period the rate begins to float, but can only rise or fall at fixed intervals.

The amount the rate can change is predetermined (normally ½% to 2% per upward or downward change). The intervals are normally 6 or 12 months. Typically there is a "Cap" on the margin, which determines the highest the rate could ever go.

• Obtain a lower rate, for a known period of time, while you watch the market to see if and when fixed rates get better
• Balloon mortgages may have a slightly better rate than fixed rate mortgages, but an ARM will adjust at the end of the "fixed period", whereas a "Balloon" has to be refinanced or paid in full
• Recommended if staying in the home for a fixed period and have taken the time to factor in the margin, to determine that they would not be better off with a Fixed Balloon or even a Fixed Rate
• Very attractive to borrowers who are in the process of cleaning up their credit

With deferred Interest ARM loans, monthly payments and rate changes often do not move at the same time.  Example: monthly payment changes 12 months after funding, then annually after that (with a fixed "cap" on the amount of the payment increase); yet "rate" changes many months before that!

Perhaps you are interested in having the stability of a fixed payment for the 15 or 30 years. If so, you should consider our fixed rate mortgage option. Otherwise might also check into our temporary buydown or Balloon mortgage options. 

• Compare a fixed mortgage to an ARM
• Find Out About the 8 Deadly Home Buying Mistakes
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• Learn about Credit Scores
• Determine if you want to be pre-qualified or pre-approved
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