Most buyers know that first-year interest on Adjustable Rate Mortgages (ARMs) is typically lower than the interest on available fixed-rate mortgages. This makes ARMs easier to qualify for, but also requires that borrowers have some understanding about how such loans work, because there are significant details associated with the low first-year rate.
First, check to see how long the low rates offered on the ARM are guaranteed. After that period of time, the rates can go up two points a year to a typical rate cap of six points over the life of the loan. Lenders will usually require borrowers to qualify for a mortgage loan that is several percentage points above the actual initial rate charged on the ARM. This is intended to keep borrowers from becoming overburdened by debt. Some lenders may charge special fees or caps which can increase the cost of the loan. If you think that an ARM may work for you, it is a good idea to shop around.
The Sue Martin Team Coldwell Banker Gundaker 516 Old Smizer Mill Road Fenton, MO 63026 Cell: 636-795-3400 Office: 636-717-6000 Fax: 636-326-1000 Sue@SueMartinTeam.com
Sue Martin and her Home Selling Team is the Fenton area's #1 full-service Realtor whose business success is based on a results-oriented team approach. This dedication to service has resulted in The Sue Martin Team being ranked by St. Louis Business Journal and St. Louis Magazine as one of Metro St. Louis' top Realtors. Sue and her team of professional agents are focused on providing quality services to facilitate home buyers and sellers in achieving their real estate goals through exceptional customer service, track record and experience, and results-based systems. Referrals and recommendations from past clients and customers are a testimony to the team’s commitment, high performance standards and results.
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