It almost seems impossible to live without credit cards, student loans, car payments, and all…
Here’s something that might surprise you –an adjustable-rate mortgage (ARM) isn’t a bad loan! True, some years ago, this type of home loan was linked to the bubble burst in the housing market, but it wasn’t the loan. The problem was that banks recommended an ARM when they shouldn’t have.
But there are some situations when an ARM home loan is the best choice! Not sure if it’s the right option for you? We can help!
Read the scenarios below. If one of them applies to you, you may be a great candidate for the low-interest rate that an ARM loan offers.
An ARM loan might be right if:
You’re young, single, and buying a starter home.
Your monthly payment with an ARM loan may be lower (or just about the same) then what you are currently paying for rent. The benefits of homeownership, however, are much greater than renting an apartment. With a home, you build equity and get some tax breaks too –two big pluses that are hard to come by when you’re young and single.
Looking for Mr./Mrs. Right? Or maybe you want to wait a little bit longer.
Either way, owning a home with a low payment gives you both stability and flexibility!
You plan on expanding your family.
Thinking about adding a bundle of joy in the next year or two? Then an owning a home with an ARM loan may be right for you! The favorable rates of an ARM can help you get a home with a larger square footage and with more bedrooms to make room for baby. Another plus is that your monthly payment may be lower than your current rent, freeing up your income for diapers and family fun.
You expect to get a new loan or refinance within 5-10 years.
If you plan on moving before your ARM adjusts, then this loan may make sense for you. You can enjoy the low payments while your equity builds, and sell your home before the rate is set to adjust.
You can do the same even if you plan on staying in your home. Simply refinance into a fixed-rate or cash-out refi loan before the rate resets.
You’re getting a jumbo loan.
A low rate is especially useful with a super-sized mortgage because it makes the monthly payment more manageable. ARM loans usually have the most attractive interest rates but use caution when combining an ARM loan and large sums of money. Be sure that you’ll be moving or refinancing before the rate changes, or that you’ll still be able to make the higher mortgage payment after the rate adjusts.
Do any of these scenarios sound like you? Then consider the low-rates of an ARM loan!