Adjustable-Rate Mortgage Tips for Columbus Home Buyers - Columbus Ohio Real Estate | Buyer's Resource Realty Services

Adjustable-Rate Mortgage Tips for Columbus Home Buyers

Adjustable rate mortgage ColumbusAs interest rates rise, adjustable-rate mortgages, or ARM loans, are on back on the table for Columbus home buyers. Before you decide on an ARM loan, keep these tips in mind!

ARM loans are available under Conventional, FHA and VA mortgage programs. ARM loans typically offer a temporary, fixed-rate period of three, five, seven or ten years before converting to an adjustable rate. Once the adjustable rate period kicks in, your interest rate could change every year thereafter.

For example, if you have a 5/1 arm with a 30-year term, the first five years of your loan would have a fixed interest rate. At year six, your interest rate may change, affecting your payment. It could change again year seven, year eight, and so on. Meanwhile, you are still committed to the same term. Your loan will re-amortize after every rate change to keep payoff within 30 years.

In other words, your monthly payment can increase year-over-year, depending on the rate environments at the time. However, today’s ARM loans are less toxic than those prior to the Great Recession. Initial interest rates on ARMs are no longer artificially low, which helps prevent oversized rate increases later. There are also caps on annual rate increases, and lifetime limits to keep rate hikes from spinning out of control. There are no pre-payment penalties.

ARMs can save you money, but the difference in rates between a 30-year fixed rate mortgage and a 5/1 ARM will vary with the market. It might be a full percent difference, sometimes more, sometimes less. As you go up to 7/1 ARMs and 10/1 ARMs, you’ll find less of a discount in the ARM rates vs. the typical fixed-rate mortgage.

Before taking an ARM loan, review the rates and loan costs carefully. Evaluate the payment savings against your tolerance for risk. You can learn more about ARM loans with our free e-book, “How to Buy a Home like a Pro!” It’s available by instant download at this link, and there is no obligation.

Need more info? Let us refer you to trustworthy, local lenders who will explain all of your options. And because we provide our Buyer-Clients fiduciary representation, we can help you review and compare your mortgage offers, too!

As Exclusive Buyer’s Brokers, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!

Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!

Andrew Show
Exclusive Buyer’s Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

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