Posts tagged ARM
FHA 5/1 ARM: FHA 5/1 Adjustable Rate Mortgage in Home Loans

A FHA 5/1 ARM is a kind of hybrid mortgage in which interest rates remain fixed for a 5-year period, but can then increase after that due to changes in market interest rates. Unlike regular ARMs, an FHA 5/1 ARM is insured by the government, which can give you some serious benefits.

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What Is Jumbo Adjustable Rate Mortgage Loan?

An ARM jumbo loan is an adjustable rate mortgage that exceeds the Fannie Mae and Freddie Mac loan-servicing limits. This amount, for most American counties, is $453,100. For more expensive areas, that limit can go as high as $679,650. Right now, ARM jumbo loans are becoming incredibly popular -- with statistics suggesting that around 75% of ARMs currently issued are actually for jumbo loans. Of that 75%, 47% of those home loans are for more than $1 million.

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Hybrid ARM: Hybrid Adjustable Rate Mortgages in Home Loans

A hybrid ARM is a mortgage that combines elements of a traditional fixed-rate mortgage and an adjustable-rate mortgage. To do this, a hybrid ARM has two parts, or stages: during the first part of the loan, the interest rate is fixed, meaning it doesn’t change. During the second part, the rate will change based on a specific market index. 

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3/1 ARM: 3/1 Adjustable Rate Mortgage in Home Loans

A 3/1 ARM is an adjustable-rate mortgage in which the rate is fixed for the first three years of the loan. As a hybrid mortgage, it has elements of both a traditional fixed-rate mortgage and an adjustable (or variable) rate loan. As with pretty much all hybrid rate mortgages, the shorter the period of the fixed-rate part of the loan, the lower the initial interest rate. That’s the bank’s way of compensating you for the increased risk you’re taking on when the adjustable part of the mortgage kicks in.

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10/1 ARM: 10/1 Adjustable Rate Mortgage in Home Loans

A 10/1 ARM is one type of hybrid adjustable-rate mortgage. Much like other hybrid loans, a 10/1 ARM has a fixed period (in this case, 10 years) during which your interest rate won’t change. That makes it one of the safest types of hybrid mortgages, as it gives you a lot of time to figure out your financial situation and determine whether you want to continue owning your home after the adjustable-rate period begins.

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7/6 ARM: 7/6 Adjustable Rate Mortgage in Home Loans

A 7/6 ARM is a hybrid adjustable-rate mortgage with a fixed-rate period of seven years. Unlike its cousin, the 7/1 ARM (which has one-year adjustment periods), the interest rates on a 7/6 ARM can be adjusted once every 6 months during the variable-interest part of the loan.

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7/1 ARM: 7/1 Adjustable Rate Mortgage in Home Loans

A 7/1 ARM is a kind of adjustable rate mortgage -- in this case, one that has a fixed interest rate for seven years. After that, the interest rate can change, usually depending on changes in the market interest rate. Like its cousins 3/1 ARMs and 10/1 ARMs, a 7/1 ARM is considered a hybrid mortgage because it has both a fixed-rate and a variable-rate interest period.

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5/6 ARM: 5/6 Adjustable Rate Mortgage in Home Loans

A 5/6 ARM is a kind of hybrid adjustable-rate mortgage in which the fixed interest rate period of the mortgage lasts for 5 years. After the fixed-rate period is over, the variable-interest rate part of the mortgage begins.

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3/6 ARM: 3/6 Adjustable Rate Mortgage in Home Loans

A 3/6 ARM is a type of hybrid adjustable rate mortgage in which the initial, fixed rate portion of the loan lasts 3 years, after which the adjustable-rate part of the mortgage begins.

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The Different Types of Mortgages

There are many different mortgage options for homebuyers to choose from. For starters, mortgages are usually categorized as either a fixed rate or adjustable rate. Then there are various loan programs to choose from including FHA Loans, VA Loans, USDA Loans, or Conventional Loans

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Variable-Rate Mortgage

A variable-rate mortgage is a loan with a variable (changing) interest rate. It’s also known as an adjustable-rate mortgage (ARM) or a tracker mortgage. The interest rate varies according to an underlying index like LIBOR, treasury bills, or the federal funds rates.

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Home Loans for First-Time Home Buyers

Buying your first home is a challenging but important first step in securing your future. There are many financial products available on the market for first-time homebuyers. Each product has its target market, so it’s important to understand your needs so as to match them to the products on offer.

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Variable Interest Rates in Relation to Home Loans

A variable interest rate is one that can go up or down based on an index. A variable interest comprises an index rate and a margin rate.

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FHA 7 year ARM: Federal Housing Administration 7 Year Adjustable Rate Mortgage

The FHA 7 year ARM is a hybrid mortgage that is guaranteed by the Federal Housing Authority. It is deemed a “hybrid” mortgage because it has a fixed interest rate in the beginning for 7 years and then switches to a variable interest rate. As with all adjustable rate mortgages (ARMS) the rate is composed of an index rate and the lender's margins.

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7/1 ARM: 7/1 Adjustable Rate Mortgage

The 7/1 ARM is a hybrid mortgage, it comprises years with a fixed interest rate followed by years with a variable rate. The “7” is the number of years with a fixed interest rate, the “1” represents the annual adjustment period.

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FHA 5/1 ARM: Federal Housing Administration 5/1 Adjustable Rate Mortgage

A 5-year ARM FHA mortgage is a loan with a fixed and variable interest rate that is guaranteed by the Federal Housing Authority (FHA). The loan is a hybrid adjustable-rate mortgage (ARM): it starts out with a fixed interest rate for the first five years, then the rate becomes variable. The loan comes with a guarantee to the lender that the FHA will pay it off if the borrower fails to pay.

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