Sat. Jul 13th, 2024
Adjustable-Rate Mortgage

Adjustable-rate mortgages are just one of many different types of mortgages you can get from an MA mortgage company. For most home buyers, adjustable-rate mortgages mean unpredictability, while for others, they seem like a good option. However, just like any other form of mortgage, adjustable-rate mortgages have their own set of benefits. These benefits make the ARM an ideal mortgage option for people with specific mortgage requirements. Despite all the benefits and the different rate mortgage plans, it is crucial to know the rates across different banks before making this long term financial commitment

Mortgage brokers such as NextGen Mortgage often recommend ARM to individuals looking for a mortgage with a fixed initial rate until they can get their financial status sorted out. However, since adjustable-rate mortgage rates are not as standard as other types of mortgages, many individuals shopping for mortgages don’t consider them. So to help anyone who is wondering if an adjustable-rate mortgage is a good option for them or not, we have put together this helpful article, and we suggest you keep reading.

NH mortgage companies recommend adjustable-rate mortgages due to the following qualities

Adjustable-rate mortgages have some unique characteristics that set them apart from other forms of mortgages. These unique characteristics make ARM an attractive option for specific situations, and NH mortgage companies recommend getting an ARM due to the following reasons:

The flexibility of selling the house sooner: Since the rate of adjustable-rate mortgages are fixed for a specific time, it makes ARM a great way to live in a short-term home. You can enjoy the fixed-rate period with low mortgage rates and sell the house before the adjusting period starts.

This way, you will only have to pay the fixed portion of the mortgage with usually lower rates, and it is usually a better option than renting.

Limits on how much the mortgage will adjust: While it is true that once the fixed period ends, your mortgage will be modified, and the mortgage payments may increase. However, there are limitations or caps for how much the mortgage rate can change during each adjustment.

On top of that, there is also a limit on how much the overall mortgage rate can change throughout the mortgage. So if you are worried about an ARM adjusting and changing drastically, there are caps in place to prevent that.

Low mortgage payment during the fixed period: As mentioned above, ARM has a fixed mortgage rate period that converts into an adjustment period. However, the mortgage rate you have to pay during the specified period is low, and in most cases, it is lower than other forms of mortgage. So you can actual get significant savings during the fixed-rate period of the ARM loan.

Who should get an adjustable-rate mortgage?

If you plan to live in a home for a short period, you can calculate the payments for an ARM using a loan calculator, and if they seem lower than other mortgage forms, you should get an ARM. Similarly, if you want a loan that has a shorter term, then an ARM is an excellent option in this case as well.

While there is a risk that the mortgage rate of an adjustable-rate mortgage may go up, but since ARM rates are currently low, you can benefit from the shorter duration without worrying about the significant rate increase.

Similarly, if you are a first-time home buyer, then getting an adjustable-rate mortgage might be easier for you than a 30-year fixed-rate mortgage. Finally, if you are confident that your income will increase later on, then an adjustable-rate mortgage can be a safe mortgage to get.   

Here in NH, the housing mortgage market offers plenty of options, and adjustable-rate mortgages are one of them. By reading this article, we hope you are in a better position to decide whether you should get an ARM or not.

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