According to the Freddie Mac weekly mortgage rate survey, Florida mortgage borrowers might do well to consider a 5-year ARM vs. a 30-year fixed rate home loan. This is because in some cases – the relative cost of a 5-year ARM is dropping versus its 30-year fixed-rate cousin.
During the first 5 months of 2009, 5 year ARM mortgages and 30-year fixed rate home loans ran neck-and-neck. Today, these loan products are as much as a half-percent apart. On a $200,000 home loan, that’s a difference of $60 per month, which may be your cell phone or cable TV bill.
Is a 5-Year ARM Right for You? How Do You Know?
In the interest of up front education and full disclosure – adjustable-rate mortgages aren’t for everyone.
However, for the right household, they can be a truly beneficial and wise financial option. You may be in the market for a Florida 5-year ARM if any of the following conditions apply to your situation:
- You are buying a home with an intent to sell within 5 years
- You currently have a 30-year fixed mortgage and plan to sell your home within 5 years
- You are interested in low payments and are comfortable with longer-term interest rate and payment volatility
Additionally, with homeowners with existing ARMs may want to consider taking on a new ARM, if only to extend their initial, fixed rate period.
Before choosing a Florida adjustable-rate mortgage , give me a call so that we can talk about exactly how ARMs work, and what causes them to adjust. Although conventional ARMs do provide some safeguards as to how far they can adjust, it’s important to know the risks.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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One element to define in the 5-year ARM is the interest-only loan option. On the interest-only loan, only your interest will be paid for a certain time period. Nothing will apply to the principal; the only thing that a consumer pays of your mortgage debt is the interest. It is an interest-only loan.