Adjustable-Rate Mortgage

Learn About Adjustable-Rate Mortgages

Are you in the market for a new home but aren't sure what type of mortgage loan to choose? Have you considered an Adjustable-Rate Mortgage (ARM)? At Heartland Mortgage, Inc. - Bobbie Jo Haggard, we strongly recommend this type of loan to those who are looking to maximize their buying power in today's market.

What is an Adjustable-Rate Mortgage loan?

An ARM is a mortgage loan that features an interest rate that may change periodically based on several factors. These types of loans offer a lower initial interest rate than a fixed-rate mortgage which can lead to lower monthly payments, and therefore more buying power.

Who qualifies for an Adjustable-Rate Mortgage?

These loans are ideal for individuals who plan to live in their homes for a short period of time as the initial lower interest rate is fixed for a set period. To qualify for an ARM, you generally need the following:

  1. Have a minimum 3% - 5% down payment
  2. A minimum qualifying FICO® Score of 580 - 620, and a debt-to-income ratio (DTI) of no more than 50%.
  3. It may also require that you have an established credit history and/or a FICO Score of 660+ and a down payment of at least 10%.

What are the benefits of an Adjustable-Rate Mortgage?

The lower initial interest rate can lead to lower monthly payments, which is ideal for those who are looking to save money on their monthly expenses. Additionally, an ARM can be a great option for those who are not planning to stay in their home for the long-term. This means they can take advantage of the initial lower interest rate for the period in the home.

Adjustable-rate loans typically have a rate adjustment cap that limits how much the interest rate can adjust in any given year, helping to avoid any unexpected surprises.

How often can my interest rate change with an Adjustable Rate Mortgage?

Your interest rate change will depend on the specific terms of your loan. Some loans may adjust just once per year, while others may adjust as often as once per month. The most common adjustment period is typically every six months.

At Heartland Mortgage, Inc. - Bobbie Jo Haggard, we can help find the perfect ARM for you and your specific needs. Contact us today!

Pros & Cons

Pros

  • Lower initial rates
    • ARMs are typically 1/4 to 1/2% lower APR than fixed rates
  • Lower initial monthly payment
    • About $15-$20 per $100k borrowed
  • More houses available
    • More houses may be within reach due to lower upfront payment
  • Easier to qualify
    • With lower monthly upfront payments, borrowers may stay below DTI limits

Cons

  • Unpredictable
    • Rates will change
    • Monthly payments follow rates
  • Harder budgeting
    • Rate resets can spike monthly repayments
  • Harder to understand
    • Hard to compare loan offers
    • Need to learn industry lingo like rate caps, reference rates and margin
  • Interest rate risk
    • Benefit if rates fall
    • Expose to rising rates

Getting started is easy. We offer competitive rates, have great service, and local processing.

Licensing

Heartland Mortgage, Inc.
Co. NMLS# 3205
Bobbie Jo Haggard
NMLS# 92472
Licensed to do business in
Washington & Oregon

NMLS Consumer Access

Equal Housing Opportunity

Contact Bobbie Jo

Heartland Mortgage, Inc. - Bobbie Jo Haggard
30 S Palouse St
Walla Walla, WA 99362

Direct: (509) 301-1661
Office: (509) 529-3280- Ask for Bobbie Jo
Fax: (509) 522-1074
efax: (509) 267-1676

Information contained herein is deemed accurate but not guaranteed. Programs shown do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. Not an offer to extend credit or commitment to lend. Loans subject to underwriting approval.  Contact Heartland Mortgage, Inc. directly to learn more about its mortgage products and eligibility for such products.