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ARM Versus FIXED

Fixed Rate versus Adjustable Rate
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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.

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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.

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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.

This site is maintained Ozell Jackson, a loan officer with The Legacy Group license# MLO-113222, for the purpose of informing people of real estate financing options. Industry average interest rates provide by MORTGAGE New Daily (click here for more information about mortgage rates). This is not an offer to lend at a specific rate. Several factors determine an interest rate. For a personal rate quote, call (877) 313-5954. This does not constitute a commitment to lend. All loans subject to full underwriting approval and satisfactory appraisal. Program subject to change without notice. Individual(s) listed are employees of Legacy Group Lending, Inc., NMLS ID #4455. Affiliated companies: Legacy Group Capital, LLC NMLS #99045, Legacy Group Escrow, LLC License # 540-EA-40580. For state specific licensing information visit www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/4455. January 2nd, 2012.