Anew Lending Answers the Question: Are Adjustable Rate Mortgages Safe?
Anew Lending is a mortgage lender in California helping home shoppers move into their dream spaces as effortlessly as possible. Their adjustable rate mortgage services in Elk Grove, CA, give home buyers the financing to secure their ideal property, but are adjustable rate mortgages safe relative to other loans?
Advantages of Adjustable Rate Mortgages
Low Initial Costs
Monthly payments and interest rates for adjustable rate mortgages are considerably lower than other mortgage types throughout the fixed-rate period. While those costs change in the adjustable period, these loans give applicants years to save money and prepare for those higher costs.
Rate and Payment Caps
There is some predictability with adjustable rate mortgages, even though interest costs constantly fluctuate. This is because ARMs have an interest rates and payment caps, meaning expenses can't exceed a certain threshold.
Downsides of Adjustable Rate Mortgages
Unpredictability
The only real risk of adjustable rate mortgages is their unpredictability. ARMs start with a fixed initial interest rate; in most cases, they hold steady anywhere from three to ten years. However, after that, they shift into the adjustable period for the remaining life of the loan, and interest rates fluctuate every six months.
While that unpredictability can mean borrowers might have smaller payments after their fixed-rate period, they can just as easily have higher interest rates. The possibility of inflated fees is an inherent risk that applicants should know before taking a mortgage.
Beyond the cost differences, most borrowers also don't enjoy the inability to plan their budgets and payment schedules concretely. This can be discouraging when asking, "are adjustable rate mortgages safe?"
Complexity
All mortgage types are confusing for most first-time borrowers. Still, adjustable rate mortgages have so many unique terms and conditions that they often feel more overwhelming than the other choices.
Adjustable rate mortgage applicants must know how long their fixed period and adjustable periods last and how unpredictable rate adjustments factor into their bills. Unfortunately, anyone who doesn't fully understand their mortgage terms might sign up for a loan they cannot pay back.
Who Should Apply For Adjustable Rate Mortgages?
So, again, are adjustable rate mortgages safe?
The experts at Anew Lending are happy to help determine if an adjustable-rate mortgage is right for you. As a full-service direct lender, the company will walk you through the entire lending process.
Contact Anew Lending in Elk Grove, CA, today for more information or to request a pre-approval application for a mortgage. The office is at 9323 Laguna Springs Dr, Ste 110, Elk Grove, CA, 95758, and prospective borrowers can call at (916) 226-9991.
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