"Fixed Rate Mortgages are the Gold Standard for home financing" says Adrian Citroni - a 28 year veteran Mortgage Broker in Catonsville". However, he adds "There are 3 excellent scenarios for Candidates considering an Adjustable Rate Mortgage."
Variable
Adjustable Rate Mortgages
Adjustable Rate Mortgages (ARM) have a rates that vary. The initial interest rate is lower than a fixed rate mortgage. In times when Interest rates are escalating rapidly, an ARM is a viable option to be able to afford the home you need or want. Interest Rates go up and down. An ARMs is structured such that the initial interest rate is fixed for a period of years. It can be 1, 3, 5, 7, & 10. Then it usually adjusts annually. The adjustment is based on a published financial index plus a margin. The margin is the number of percentage points added to this index to set your new interest The margin is set in your mortgage note and will never change for the life of the loan
The parameters of this adjustment are agreed-upon ahead of time. At the initial adjustment, the interest rate can never exceed the CAP Rate. A cap protects you by limiting the max rate increase at the adjustment interval. For added protection each subsequent rate adjustment is also capped.
If you want more information on ARMs here is a link to a government informational booklet
Candidates for ARMs
The Ad Interim Homeowner. If you don’t plan to live in the property long enough for the rates to rise.
The Bumping-Up Income Earner. If you anticipate an increase in income or your spouse entering the work force, an ARM could save you from paying a lot of money on interest over the years.
The Pay-It-Off Scenario: If you have, the money to pay off the loan before the new interest rate adjusts.
ADRIAN CITRONI - MORTGAGE BROKER
Primary Service Area: Catonsville & Vicinity
Academy Heights, Arbutus - Halethorpe, Catonsville, College Hills, Elkridge, Ellicott City, Oella, Westchester
Licensed Loan Originator NMLS# 144522; MD - DC - PA - DE - VA - FL - CA
CALL OR TEXT: 410-916-077