An FHA ARM loan? With such great 30 year fixed rates? In this day and age of great interest rates, few home buyers think of purchasing a home with an ARM (Adjustable Rate Mortgage) loan. Steve Tedrow of Windermere Mortgage Services talks about why he thinks the FHA ARM loan works for some buyers.
There is much negative publicity about ARM loans. But, did you know that the FHA 5 year ARM has many advantages which could enable a buyer to buy more or save more in their monthly payment. One of the unique features to an FHA ARM is that the adjustment cap after the initial 5 year term is only 1%. Compare a 5 year ARM at todays’s rate of 2.875% versus a 30 year fixed rate mortgage at 4%. If you assume a worst case scenario, the average interest rate over 9 years is 3.99% on the ARM. Many first time home buyers do not plan on staying in a property more than 5-6 years. The FHA ARM could save them thousands of dollars over this time frame.
Or, it could allow them to purchase a more expensive property without increasing your monthly payment:
You can contact Steve or your loan officer to learn more abut FHA ARMs.