Investment Properties

Fixed versus Adjustable Rate

How do adjustable rate mortgages work? There are five components of an adjustable rate mortgage (ARM)

Initial fixed rate
- This rate is fixed for a specific period of time

Adjustment period
- When will the loan adjust or change in rate

Index
- Most lenders base the adjustable rate on a published rate index (such as the one year treasury bill, the 1 year T Bill or the London Interbank Offered Rate, L.I.B.O.R. ) these rates can be found published in the Wall Street Journal.

Margin
- To determine the interest rate upon adjustment, the lender will add a margin (usually 2%-3%) to the index.

Cap
- Some adjustable rate mortgages have a maximum amount the interest rate can go up or down. There could be a cap for each change or the maximum change for the life of the loan.

Here are a few facts to know about housing:

According to the 1995-2000 census, more than 50% of all Washington households move within the first five years.

In the past, it was uncommon for a person to hold a mortgage for more than 7 years without refinancing.

If you believe you will move within a certain period of time or buy into the fact that the average life of a mortgage is less than 7 years, you could be paying more by going with a fixed rate.

Click here for to comparisons

Please review the below properties. We can arrange a property tour. Call (877) 313-5954 or click here to get pre-approved to use the Adjustable Rate Mortgage Property strategy.

Click here to search for additional property

Special Note:Our teams are only compensated when we represent a buyer in a transaction or close a mortgage loan. For this reason, only limited property information is available. To obtain full information on these opportunities, please contact one of our team members. Call (877) 313-5954 for additional details.