Adjustable Rate Mortgages
3/1 Adjustable Rate Mortgage
This 30-year loan offers a fixed interest rate for the first 3 years and
then turns into a 1 Year Adjustable Rate Mortgage for the remaining 27
years of the loan. This loan has recently become quite popular by those
seeking to minimize monthly payments while accepting a certain amount
of risk.
This loan may be right for you if you wish to maximize
the amount of loan you qualify for and expect to remain in this home
for more than 3 years. This loan is generally the least expensive way
to fix your monthly payment for the first three years of your loan.
After that, this loan is like a 1 Year ARM with all of its risks and
rewards. This loan may not be right for you if you are concerned that
your income in three years may not cover your monthly payment after
your first adjustment.
5/1 Adjustable Rate Mortgage
This 30-year loan offers a fixed interest rate for the first 5 years and
then turns into a 1 Year Adjustable Rate Mortgage for the remaining 25
years of the loan. This loan has a longer initial fixed period than the
3/1 Adjustable.
This loan may be for you if you fit the profile for the
3/1 Adjustable Mortgage but wish to trade off a higher initial rate for
the security of a longer initial fixed period. If you are certain you
will only remain in this home for less than the initial 5 years,
consider the 5/25 Balloon Mortgage instead.
7/1 Adjustable Rate Mortgage
This 30-year loan offers a fixed interest rate for the first 7 years and
then turns into a 1 Year Adjustable Rate Mortgage for the remaining 23
years of the loan.
This loan could be right for you if you plan to remain
in this home at least the initial seven years but consider it likely
that you may wish to remain longer. If you are certain you will only
remain in this home for less than the initial seven years, consider the
7/23 Balloon Mortgage instead.
10/1 Adjustable Rate Mortgage
This 30-year loan offers a fixed interest rate for the first 10 years and
then turns into a 1-Year Adjustable Rate Mortgage for the remaining 20
years of the loan.
This loan may be right for you if you plan to remain in
this home at least the initial ten years, but consider it likely that
you may wish to remain longer. Consider this loan if you wish to have a
long period of fixed monthly payments, but still wish to enjoy some
savings over the 30-Year Fixed Rate Mortgage.
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