One of the first choices a homebuyer will need to make is whether you want a fixed-rate or an adjustable-rate mortgage loan. The bulk of loans will fit into one of these two categories, however, there is a third option that will allow you to “hybrid” the two.
An adjustable-rate mortgage, (ARM): The interest rate of the mortgage adjusts periodically based on market conditions. For example, your payment will go up if rates go up and go down if rates go down. Fixed-rate Mortgage: Unlike an adjustable-rate mortgage the interest rate is set at the time you take out the loan and will not change. Fixed-rate home loans can be 10 years, 15 years, 20 years or 30 years fixed. 30-year fixed is the most common because it allows your mortgage payment to be the lowest. Hybrid ARM: Features an initial fixed interest rate for a certain amount of time and then becomes an adjustable-rate for the remainder of the term. Standard terms are 3, 5, 7, or 10 yrs.
ARMs AREN’T WHAT they used to be
Considering an Adjustable Rate Mortgage? Today’s ARMs are a lot different than they were in the past — and they may be the best choice for your purchase or refinance.
ARMs ARE SMARTER
- Most people only stay in their mortgage for 5 to 7 years. Why not go for the lower rate?
- With an ARM, more of your payment goes toward the principal, so you pay down your mortgage faster.
ARMs ARE SAFER
- ZARMs no longer feature pre-payment penalties, so you can easily refinance.
- You’ll never have to worry about a big balloon payment
ARMs CAN SAVE YOU MONEY
Although we are located in Laguna Hills, we work with clients around all of Orange County and California, including in Newport Beach, Irvine, Aliso Viejo, Dana Point, Laguna Niguel, San Clemente, Mission Viejo and as far as Oceanside and San Diego.