Adjustable-Rate Mortgage in Carrollton
Prospective home buyers are faced with a multitude of mortgage options in Canada. At The Mortgage Ability, we’re here to make things a little easier. Our experienced mortgage brokers will work closely with you and our extensive lender partnerships to match you with the ideal, most economical product for your financial needs.
Call us today to schedule a consultation with a professional. Reach us at (214) 293-9383.
What Is an Adjustable-Rate Mortgage?
An adjustable-rate mortgage is a unique type of loan in which the interest rates go up and down with the market. This fluctuation provides applicants with significant cost-saving potential—we’ve seen clients save thousands of dollars over the long haul.
In an adjustable-rate mortgage, otherwise known as an ARM, your loan generally begins with a short-term fixed-rate period. These periods are often locked in at below-average interest rates, which increases your cost-saving potential. After this initial term ends, your interest rate will fluctuate either up or down every year until your mortgage reaches maturity.
How Does an Adjustable-Rate Mortgage Work?
Adjustable-rate mortgages come in a variety of different structures, and each works a little differently. Some of the most common ARM structures are:
In these examples, the first digit represents the length of the initial, fixed-rate period in years. The second digit represents how frequently, in terms of years, the interest rate will be adjusted after the fixed-rate term ends.
What Drives Change in Adjustable-Rate Mortgages?
The interest rate in an ARM changes in response to an index. This index is a benchmark rate of general market conditions and is used by the lender or bank to recalculate your interest rate every year.
Your ARM contract can also include rate caps, which limit the amount your monthly payment can increase and decrease. With a firm grasp on these variables, you can better understand what to expect from your mortgage payments in the future.
At The Mortgage Ability, we take the time to explain the fine print to our clients. We’ll inform you of all possible scenarios, so you’re fully equipped to budget for changes in your loan payments.
What’s the Difference Between Adjustable-Rate Mortgages and Fixed-Rate Mortgages?
The difference between these two mortgage types is simple. In an ARM, your interest rate changes periodically. In a fixed-rate mortgage, it is locked in place from start to finish.
What Are the Pros and Cons of an Adjustable-Rate Mortgage?
Adjustable-rate mortgages are an attractive option for prospective home buyers because of their cost-saving potential. What’s more, their initial fixed-rate periods are usually offered at lower rates than fixed-rate mortgages, meaning you can guarantee a period of below-average monthly payments before they begin to fluctuate.
From the opposite perspective, ARMs are a riskier option because you can never be sure how the market will behave—your payments may go up year by year. To apply for an ARM, you should have a certain amount of financial security to accommodate varying payments.
Discover the Benefits of an ARM
The right mortgage for you depends on your unique financial situation and goals. Discover the many options available to you in Carrollton. Our mortgage brokers would be happy to walk you through your possibilities one by one until you find a perfect match.
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