Increase in Adjustable Rate Mortgage Loans as ARM Rates Track Lower

Why would a first-time home buyer want to investigate adjustable mortgage rates? Well, there are many reasons for doing so.


Pittsfield, MA -- (SBWIRE) -- 05/30/2013 -- is here to share its knowledge about mortgage refinance at adjustable rates, such as:

- Positives and Negatives
- ARMs Compared to FRMs

Benefits vs. Drawbacks

Having an adjustable home loan mortgage rate has several benefits, particularly if one is purchasing a home for the first time. One of them is that the opening interest rate is usually much lower than that of a fixed rate mortgage. Another benefit is the length of the initial rate, which can remain unchanged for a set period of time, say, the first 5 years of a 30-year mortgage. After those 5 years, the rate will most likely rise considerably. However, for a first-time buyer, the adjustable rate mortgage (ARM) is the better choice simply because of the lower rate. Apply for an ARM with any local lender.

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ARMs vs. FRMs

Adjustable rate mortgage rates vary from lender to lender but are generally close to each other. Some are as low as 3%; others are up to 3.8%. The interest rate changes as the housing market does, which is somewhat of a negative point, but home buyers are fully aware of this at the outset of the loan. Fixed rate mortgages (FRMs) have higher rates, but they do not change over the life of the loan. This makes them attractive to folks on a budget because, regardless of what the interest rate is, they will always know exactly how much the mortgage payment will be.

Federal Housing Authority ARMS

The Federal housing Authority (FHA) has different adjustable mortgage loan rates programs available for low-income people who are trying to get into home ownership. Along with other FHA and HUD programs, one of these programs can help with lower initial rates and with keeping the mortgage payments affordable. Referred to as Section 251, this program insures purchases of homes or loan refinances. Section 251 goes along with other FHA/HUD plans to keep home buying costs to a minimum.

Veterans’ Administration ARMs

The Veterans’ Administration offers a terrific plan for those individuals who have given of themselves for their country. It’s called the VA Hybrid ARM, and it has excellent adjustable mortgage rates. The Hybrid plan grants a veteran a beginning fixed rate of three to five years; after that, it adjusts annually. This plan allows for a 1% interest rate adjustment after the initial fixed rate time period, and then for a 5% cap for the rest of the loan’s life.

About is a reputable website located in Pittsfield Massachusetts, no-cost website which provides all manner of realty-related financial advice to those seeking it. For a free consultation, dial 1-800-987-1397.