Are all adjustable rate mortgages bad? Is this a loan program worth looking into? The answer is it depends! And unless you’ve determined it’s not an option and understand why, why not ask questions and make sure you’re educated on all programs available?
ey guys, Keith Renno here. Welcome back to the channel or wherever you are viewing this. I want to try to keep this short and sweet and give you a concept when it comes to ARMs, or adjustable rate mortgages. Now, for the last several years, no one wanted to hear ARMs. That was a scary acronym to even put out there to a potential home buyer or someone taking on home financing. No one wanted to even look into ARMs. And really, in the last many years, why would you with the 30-year fixed being so low? And that, and a lot of folks, when they think of ARMs, they think of these ARM products that were around in the early 2000s, where maybe you had an introduction rate of 1%, and then a few years down, the later, all of a sudden before you knew it, your interest rate was 5%, 6%. There was a big adjustment in your monthly payment. A lot of folks got themselves into trouble.
The ARM products that I am referring to in today’s market are not those at all. Most of the ARM products out there, they’re fixed for the first five years, seven years or even 10 years. And please, this is not a rate quote, I’m just talking about a general concept. So again, trying to keep this short and sweet, I recommend looking into the option and comparing it to say a 30-year fixed option. And when we look at the ARM products, let’s say we’re fixing one for seven years, if we’re having a lower cost upfront and a lower cost monthly, we need to look at that savings and say, okay, the next seven years, do we feel interest rates, even if they go up a little bit more, or might they come down and be in the range they’re in currently, might they be even a little bit lower? Heck, even if they’re a little bit higher in the next seven years, or when it comes time to maybe refinance, would you be going into an interest rate all that much higher than what you would be obtaining today?
So again, just a concept, I’m just advising that you talk to your mortgage professional, talk to myself or whoever you know, like and trust that’s handling your home financing and ask them to run some side by side comparisons. And not just what it looks like today, but what it might look like over the next seven years, 10 years, 15 years. Even if you need to refinance in the future, what do some of those hypotheticals look like? And I am finding that many folks are finding a benefit, a savings, a educated risk that they’re taking in taking on an ARM product in today’s market when interest rates are the highest they’ve been in some time, and managing this uncertainty, managing these higher rates with a little better product and some educated planning that we’re going to keep a close eye on and keep track on throughout the process.
So, if you haven’t looked into ARM products, if you’ve just heard the word ARM, adjustable rate mortgage, and said, heck no, don’t even mention that to me. I just advise you, revisit all of your options with a trusted mortgage professional, whether that’s myself, or again, someone else you know, like and trust, and see what’s out there and available. Because it’s not 2002, 2005, we’re in a totally different environment, totally different regulation in terms of how mortgages are brought forth. There’s a whole lot of protection out there for consumers and it is good to know your options, it’s good to know numbers. Check them out and
thank you for spending a few minutes with me here today. Take care.
Should you have any further questions feel free to send me a message.
Senior Loan Originator
Over the past 15 years as a mortgage professional, closing on average 150 loans per year, I have gained a wealth of knowledge and experience about the mortgage industry. My goal with this website is to give you just the INFORMATION you need about mortgages with ZERO sales pitch. I hope you find my posts of value and share it with 1 other person who might find value in it as well.