An adjustable rate mortgage, also called an ARM, is a type of mortgage that is often obtained through refinancing. This mortgage starts off with a fixed rate of interest and then leads to your interest rate moving up or down, depending on the current market. If you are considering a refi, it is in your best interest to work with a mortgage lender, so you can make an informed decision on whether or not this type of mortgage will benefit you.
An adjustable rate mortgage can help to get you a lesser interest rate than your current mortgage offers. This can allow you to lower your monthly payments. Unfortunately, there is a risk involved. Once your period of fixed rate payment ends, the market can cause your interest rate to go higher, leading to higher payments. You will need to make a decision on whether or not lowering your payments now, is worth the risk.
In an ARM, the interest rate can change once a year or more often. You can lock in your fixed rate for a specified period of time. The ARM may be a five-year, ten-year or thirty-year, depending on your financial needs. Through a refi, you can dramatically lower your payments, so you can hopefully pay down your mortgage loan much faster.
Changes to your interest rate will vary, depending on the type of ARM you have. Each adjustable rate mortgage contains a lifetime limit. Throughout the life of your loan, the amount of your interest cannot go above or below this pre-determined amount. This helps to protect consumers from experiencing extremely high mortgage rates, so their payments are affordable.
This type of mortgage is often decided on when a homeowner wants to lower their payments for a set time and then plans on adjustable rate mortgage, once their mortgage becomes variable. Other owners may choose an ARM when they do not plan on living in their home longer than five years.
Whatever your reasons for choosing an adjustable rate mortgage, Direct Mortgage Loans can help. They can help you through every step of the process and will work to close your loan as quickly as possible. Through this company, you can get out of your high interest rate mortgage and lock in a lower rate for a specified time. Contact them today for further information, so you can get assistance in getting the mortgage loan you need, so you can get the best results possible.