About Adjustable Rate Mortgages
Adjustable rate mortgages or ARMS provide borrowers with lower interest rates in the short term and are ideal for those anticipating an increase in income or those looking to pay off or sell their homes within a few years of purchase. In simplest terms, adjustable rate mortgages start at a low interest rate which will remain fixed for a three to ten-year term. After the expiration of the initial low-rate term, the interest rate may adjust upwards depending on market conditions. This adjustment allows the borrower the advantage of lower payments in the first few years of the loan and the time to raise or save capital to pay off the loan if the interest rate adjusts upwards. Borrowers with adjustable rate mortgages may also have the option to refinance at a low, fixed rate before their loan adjusts.
Crestline Funding’s Adjustable Rate Mortgages
Interest Only Loans
Although this loan product is less common given today’s real estate market, qualified buyers can apply for interest only loans. Interest only loans provide low payments and the borrowers the decision whether or not to pay down their principal. Interest only adjustable rate mortgages are beneficial for those who would like to purchase a more expensive home and are expecting increased income in the future or would like greater flexibility in the amount they pay on principal from month to month. Interest only adjustable rate mortgages are also beneficial for those who plan on selling or refinancing their loans before the interest only period ends. The disadvantage of interest only adjustable rate mortgages is that eventually, when the interest only term has expired, the borrower must be financially prepared for making fully amortized payments to cover both the interest and the principal on the loan.
Fixed Period Adjustable Rate Mortgages
Fixed period adjustable rate mortgages begin with a fixed-rate period of anywhere between three to ten years before the interest rate resets. The initial rate often is lower than the 30-year mortgage rate, resulting in lower monthly payments. When the rate resets, the monthly payment is calculated based on the remaining balance and could end up lower if the borrower put extra money toward the principal. Fixed period adjustable rate mortgages are ideal for borrowers who are reasonably sure their income will increase before the rate rises, those who plan on returning to work, or those who have saved adequate cash during the low-rate period to accommodate potential fluctuation in their monthly payments.
Home Equity Loans
Using home equity, qualified borrowers can open a revolving line of credit with adjustable, flexible payment options. Just like an adjustable rate mortgage these programs allow borrowers to cash out the equity in their homes to pay for medical expenses, home repairs, education costs or for any other reason homeowners could use some additional capital.
Crestline Funding – Your Friend in the Mortgage Business
As a direct lender, Crestline Funding can personally tailor adjustable rate mortgages that meet each borrower’s individual needs and can do so at some of the lowest interest rates available. Our lowered overhead also allows us to avoid wasting money on middle men and broker’s fees so we can pass the savings directly to our customers. Crestline Funding originates its own loans from its own capital allowing us greater flexibility to approve applicants regardless of their credit history.
Ready to experience the Crestline Funding difference for yourself? Apply now to see if you are preapproved for one of Crestline Funding’s adjustable rate mortgages – in some cases we can get back to you in as little as 20 minutes.
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