A variable-rate mortgage or an adjustable-rate mortgage (ARM) is a mortgage loan where the interest rate is periodically adjusted based on an index which reflects the charge to the lender as far as borrowing on the open credit market. Another thing to remember, most people have better credit than they think, usually Fair Credit or better, keep this in mind while filling out our online form. When contacted by us, kindly ask our loan professional any question you may have. They will be more than happy to assist you in making sure an adjustable rate mortgage is best for you. Remember, all loans don't fit all people; if you need a mortgage loan, we're will find the right one for you.
This type of loan can be initially provided at the lender's standard variable base rate for a certain term, i.e. 5 years. There could be a direct link to the underlying index, but the lender can decide to increase or decrease the rate at their discretion after the initial term. If your rate goes up substantially, you will need to refinance.
Adjustable-rate mortgages, according to HUD.gov, are usually the way to go for home owners planning to move in a certain number of years. For example, if you plan on moving in 5 years, then get a 5-year adjustable rate loan. The point being, you will move before the adjustable rate adjusts up. You will save quite a bit of money in doing so.
Peak Home Loans