Are You Considering an Adjustable Rate Mortgage?

When you’ve found the perfect home after months of searching, it’s hard to think about anything else. Homeownership is a giant milestone in your personal life and also a huge commitment financially. It’s important to find the right mortgage for your lifestyle and for any future plans you may have.

What Is an Adjustable Rate Mortgage?

An adjustable rate mortgage has an interest rate that is fixed for a set amount of time after which it resets periodically and shifts up or down depending on the terms of the loan. Every ARM program has an index that is tied to either the LIBOR or the Treasury. The index is what your lender uses to reset your rate in the future.

In closing our latest purchase on a piece of investment property, I enjoyed the personal service we received. Thanks again for the attention to detail.Donnie

Your lender will calculate the fully indexed rate by adding the margin (which remains constant for the life of the loan) to the underlying index that is tied to the interest rate. The result is usually rounded to the nearest one-eighth of a percent.  There are four main ARM options that can determine your monthly payment and are described as minimum, interest-only, fully amortized 15-year and fully amortized 30-year mortgage. This rate will adjust every six to twelve months depending on your particular loan contract. The amount of time between rate and monthly payment adjustments is called the adjustment period.  You can find the best option by contacting one of our knowledgeable loan officers.

To protect both borrowers and lenders, adjustable rate mortgages also come with interest rate floors and ceilings, or caps. The interest rate floor is the lowest possible interest rate that you can pay on a mortgage. The floor protects lenders from losing money on loans if the index decreases dramatically. On the other side, the interest rate ceiling marks the highest possible rate that you can pay on a mortgage. This protects you from paying an outrageous rate if the index suddenly swings upwards.

When Should You Get an Adjustable Rate Mortgage?

Adjustable rate mortgages are beneficial if interest rates are higher than in previous years and likely to fall. On the other hand, if rates are already low, you may want to consider a fixed rate instead.

An adjustable rate mortgage may also be good option if you plan on moving soon or if your job requires you to move often. The adjustable rate typically starts out at a lower percentage than a fixed rate. If you retire your mortgage quickly, the adjustable rate may not have time to shift upwards.

Choose a Mortgage Company That’s Right For You

When you contact Georgetown Mortgage, our goal is to find a home mortgage that fits your future. You’ll be assigned a loan consultant who can guide you through the loan process, hear your concerns and answer any questions you may have. That same consultant will stay with you from the moment you sign the application to the moment your loan is closed and funded.

We hire true loan consultants. Once our consultant starts with a buyer they work with them until the loan is closed and funded.Georgetown Mortgage Loan Originator

When you’re signing up for a mortgage, you need a mortgage company you can trust. At Georgetown Mortgage, honesty and integrity are strict company policies. We’re from Texas, and we care deeply about the well-being of our fellow Texans.

We promise to treat you fairly and explain the loan process to you every step of the way.

Contact Georgetown Mortgage Today

When you’ve found the home of your dreams, you need to act quickly and secure a loan before it’s too late. Contact Georgetown Mortgage today to speak to one of our loan consultants.

LIBOR and Treasury Rate Indexes

This WeekThis MonthYear Ago
1 Year Libor Rate0.230.240.23
1 Year Treasury Rate0.080.100.09

View Libor and Treasury Rate historical indexes