Tuesday, April 22, 2014 - Article by: Justin Fitzhugh - Nations Lending Corporation -
The Adjustable Rate Mortgage, ARM, is a good alternative for borrowers who are comfortable with risk, or borrowers whose income fluctuates through the year. The risk that a borrower takes when he/she acquires an ARM, is the potential for interest rates to go up; but just as likely, the borrower may be rewarded with interest rates going down
Relative to the fixed rate loan products, this type of loan requires smaller monthly payments upfront, and therefore, is attractive to first time home buyers who have small incomes but want to own a home. the monthly payment of this type of loan may increase or decrease depending on the interest rate index to which the loan terms are tied to.Generally, a adjustable rate mortgage is characterized by the following:
Common variations of Adjustable Rate Mortgages are:
ARMs interest rates are tied to commonly used Interest Rate Index. Some of these are:
Adjustable rate loan products can be a good alternative for borrower who can handle the pressure of potential interest rate increases. The best candidates for these products, are borrowers with a good credit history who can refinance an ARM quickly if the economic data turned against their bet for stable or lower interest rate movements.
Good ways to manage and ARM, is to know and be alert to end of the introductory rate, and first adjustment changes. Another good piece of information, is to know prepayment limitations, if any.
ARMs give potential homeowners an opportunity to finance their dream home. However, there are risks attached to this type of product, and potential borrowers must make every effort to understand these risks, and be prepared for the best and worst case scenario.
Nations Lending Corporation differentiates itself through its common sense underwriting. We make it our mission to carefully look at every loan application. Our mortgage branch opportunities feature average 28-day closings with minimum overlays. As a mortgage banker with direct agency, we do not offer a net branch, but we are a far better alternative than any mortgage net branch opportunities out there. Please, visit our website to learn more.
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