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Adjustable Rate Mortgages

While the name of this loan almost says it all, there are certain things about ARMs you should know. Let America First -- your Utah and Nevada mortgage lender -- help you understand some of these details.

Rates are lower
Because ARMs are subject to adjustments later on, the initial interest rate is set lower. This provides you with smaller payments at first or increased purchasing power.

ARMs have changed
In addition to standard programs that adjust annually, our loans have an initial fixed rate from three to 10 years before adjusting. These options are best for those who want payment stability and a lower monthly expense.

Lifestyles change
First-time buyers no longer tend to stay in their starter homes for 30 years, while experienced homeowners often plan to pay off their mortgages long before the 30-year maturity dates. These members may benefit from choosing ARM products with initial fixed-rate periods that correspond with the amount of time their loans are expected to be outstanding.

An ARM may be a good choice if you:

  • Want to maximize your buying power
  • Want to keep your payments lower during the first few years of your loan
  • Plan to move into a different home within the next 10 years
  • Plan to pay off your mortgage within the next 10 years

Expect your income to increase significantly

1 Year ARM

Best Choice If:

You want:
  • Low initial payments.
  • Payments that adjust up and down with market movements.
  • You expect your income to increase.
  • Advantages:

  • Low initial rate and payment.
  • Treasury indexed ARM. Interest rate and payment adjustment may occur every 12 months.
  • Conversion to a fixed rate is available.
  • Loan may be assumed unless converted to a fixed rate.
  • Disadvantages:

  • Interest rate and monthly payments adjust annually.
  • Interest rate can rise above the current fixed figures.
  • May not be the best choice for borrowers on a fixed income.
  • 1 Year ARM Refinance

    Best Choice If:

    You want:
  • Low initial payments.
  • Payments that adjust up and down with market movements.
  • You expect your income to increase.
  • Advantages:

  • Low initial rate and payment.
  • Treasury indexed ARM. Interest rate and payment adjustment may occur every 12 months.
  • Conversion to a fixed rate is available.
  • Loan may be assumed unless converted to a fixed rate.
  • Disadvantages:

  • Interest rate and monthly payments adjust annually.
  • Interest rate can rise above the current fixed figures.
  • May not be the best choice for borrowers on a fixed income.
  • 3/1 Year ARM

    Best Choice If:

    You want:
  • To keep your payments low.
  • To maximize your loan amount.
  • The interest rate to stay constant for more than one year.
  • To sell or refinance the property during the initial fixed-rate period.
  • Advantages:

  • Initial fixed interest rate and payments for three full years. The rate and payment may adjust annually thereafter.
  • Allows for higher loan amount, qualification, and enhanced buying power.
  • Conversion to a fixed rate is available.
  • Initial interest rate is lower than a 30- year, fixed rate loan.
  • Loan is assumable at any time, unless converted to a fixed rate.
  • Disadvantages:

  • It's riskier if you don't expect your income to increase over the initial three- year period to cover the change in monthly payment.
  • Interest rate can rise above the current fixed figures.
  • 3/1 Year ARM Refinance

    Best Choice If:

    You want:
  • To keep your payments low.
  • To maximize your loan amount.
  • The interest rate to stay constant for more than one year.
  • To sell or refinance the property during the initial fixed-rate period.
  • Advantages:

  • Initial fixed interest rate and payments for three full years. The rate and payment may adjust annually thereafter.
  • Allows for higher loan amount, qualification, and enhanced buying power.
  • Conversion to a fixed rate is available.
  • Initial interest rate is lower than a 30- year, fixed rate loan.
  • Loan is assumable at any time, unless converted to a fixed rate.
  • Disadvantages:

  • It's riskier if you don't expect your income to increase over the initial three- year period to cover the change in monthly payment.
  • Interest rate can rise above the current fixed figures.
  • 5/1 Year ARM

    Best Choice If:

    You want:
  • A longer initial fixed period than the 3/1 ARM.
  • To keep your payments low.
  • To maximize your loan amount.
  • The stability of a fixed monthly payment for the first five years of loan.
  • To sell or refinance the the property during the initial fixed-rate period.
  • Advantages:

  • Initial fixed interest rate and payments for five full years. The rate and payment may adjust annually thereafter.
  • Allows for higher loan amount qualification and enhanced buying power.
  • Conversion to a fixed rate is available.
  • Initial interest rate is lower than a 30-year, fixed rate loan.
  • Loan is assumable at any time, unless converted to a fixed rate.
  • Disadvantages:

  • It's riskier if you don't expect your income to increase over the initial five-year period to cover the change in monthly payment.
  • Interest rate can rise above the current fixed figures.
  • 5/1 Year ARM Refinance

    Best Choice If:

    You want:
  • A longer initial fixed period than the 3/1 ARM.
  • To keep your payments low.
  • To maximize your loan amount.
  • The stability of a fixed monthly payment for the first five years of loan.
  • To sell or refinance the the property during the initial fixed-rate period.
  • Advantages:

  • Initial fixed interest rate and payments for five full years. The rate and payment may adjust annually thereafter.
  • Allows for higher loan amount qualification and enhanced buying power.
  • Conversion to a fixed rate is available.
  • Initial interest rate is lower than a 30-year, fixed rate loan.
  • Loan is assumable at any time, unless converted to a fixed rate.
  • Disadvantages:

  • It's riskier if you don't expect your income to increase over the initial five-year period to cover the change in monthly payment.
  • Interest rate can rise above the current fixed figures.
  • Mortgage Rates

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