Fixed Period ARM Loans
When it comes to mortgage lending, the new standard is Fixed Period ARMs (also known as Hybrid ARMs). It is one of the most common lending programs offered by Proline Mortgage. ARM is short for Adjustable Rate mortgage, which means that the loan is adjusted based on current market rates. This kind of loan is an excellent option for those homeowners not planning on staying in their houses for over 10 years. That is due to the fact that ARMs have a tendency to offer lower monthly payments and lower interest rates compared to the traditional 30 Year Fixed Rate mortgage.
The main drawback to an ARM comes with the instability after its fixed rate period expires. If interest rates are very high when this period comes to an end, you could be facing a higher interest rate than you had when you first received your loan. However, all of these loans contain a cap. What a rate cap does is specify the maximum amount that the rate may increase by during certain time periods. There are a few options that fixed period ARMs offer for the initial fixed rate: five year, seven years or ten years.
The most fulfilling and exciting time in one’s life is realizing the dream of purchasing your own house so that it becomes a reality. Contact Sean Casey with Proline Mortgage and ask any questions you may have about Fixed Period ARMs and get the best possible payment plan and rate for your home loan and your situation.