Adjustable versus fixed Chandler loans
A fixed-rate loan in Chandler features a fixed payment for the entire duration of the loan. Your property taxes may go up (or rarely, down), and so might the homeowner's insurance in your monthly payment. For the most part monthly payments on a fixed-rate mortgage will be very stable.
Your first few years of payments on a fixed-rate loan are applied primarily to pay interest. The amount paid toward principal goes up slowly every month.
Borrowers can choose a fixed-rate loan to lock in a low interest rate. Borrowers choose these types of loans when interest rates are low and they wish to lock in the lower rate. For homeowners who have an ARM now, refinancing into a fixed-rate loan can provide greater monthly payment stability. If you have an Adjustable Rate Mortgage (ARM) now, we'll be glad to help you lock in a fixed-rate at a favorable rate. Call Chandler Mortgage LLC at 480-390-4995 for details.
Adjustable Rate Mortgages in Chandler— ARMs, come in many varieties. ARMs are normally adjusted twice a year, based on various indexes.
Most programs feature a cap that protects borrowers from sudden increases in monthly payments. Some ARMs can't increase more than two percent per year, regardless of the underlying interest rate. Sometimes an ARM features a "payment cap" which guarantees your payment will not go above a certain amount in a given year. Almost all ARMs also cap your rate over the duration of the loan period.
ARMs usually start out at a very low rate that may increase as the loan ages. You've probably heard of 5/1 or 3/1 ARMs. For these loans, the initial rate is fixed for three or five years. It then adjusts every year. These loans are fixed for 3 or 5 years, then they adjust. Loans like this are often best for borrowers who expect to move in three or five years. These types of adjustable rate loans most benefit borrowers who plan to move before the initial lock expires.
Most borrowers who choose ARMs choose them when they want to get lower introductory rates and don't plan on staying in the home for any longer than the initial low-rate period. ARMs can be risky when property values decrease and borrowers are unable to sell their home or refinance.
Have questions about mortgage loans? Call us at 480-390-4995. It's our job to answer these questions and many others, so we're happy to help!