Good news if you’ve been worried about buying a home right now: the pressure that have been pushing up housing prices the last few months have started to ease up.

Housing inventory has started to slowly improve. Borrowers are starting to rediscover a way to obtain a lower interest rate at the start of their loan—the adjustable rate mortgage, often called an ARM.

ARMs were popular loans in the early 1990’s to mid-2000’s. They lost popularity after the recession of 2008 and were barely used over the last 24 months when rates were low. But now ARMs are back, and stronger than ever. Let’s explore why they are being embraced by borrowers now.

You can find the following information on THIS LINK: the definition, the types of adjustable rates mortgages, and ARMs vs. fixed rate mortgages. (Information provided by Dianne Ayala Steffey, MBA. Branch Manager/VP of Mortgage Lending)

What we want to discuss is that a substantial number of first-time buyers are considering adjustable-rate mortgages (ARMs) due to the low initial rates, which are much lower than those of typical mortgages with fixed rates. This allows them to lower their monthly payments and makes it more affordable for them to purchase a property.

If you fall into any of the following categories, an ARM may be the best choice for you:

You are single, young, and purchasing a condominium or first house
If the house you are purchasing is not your permanent home, or if you anticipate relocating for personal or professional reasons soon, an ARM enables you to pay less each month while you explore your alternatives or wait for things to settle down in your personal and financial life.

You intend to grow your family
Your living circumstances will need to alter if you are optimistic that you will give birth to a child soon, even if it is not in the near plan. Another advantage is the potential for reduced monthly payments due to an ARM’s lower interest rate, allowing you to save a little more money for when the kid is born.

In five to ten years, you anticipate getting a new mortgage
You plan to move because of a new job, a military transfer, or something else. You want to refinance because you need money for something else, or you think rates will go down. A 7/1 or 10/1 adjustable-rate mortgage (ARM) might be a wonderful choice for these individuals who do not need a 30-year fixed-rate mortgage.

You are considering applying for big loan (jumbo loan)
Because of the low beginning rate of an ARM, a larger, more expensive mortgage might free up more money. Arms often have the best rates, but since more money is at risk, it is important to exercise caution. It is essential that you know when the first adjustment period ends and if you will be able to afford the increased payments thereafter.

Still, ARMs are excellent for flexing. An ARM may be more appealing to you than a 15 or 30-year fixed rate mortgage if you are seeking a low monthly payment, do not intend to live in your house for more than 5-7 years, or if flexibility is your main goal. You may transition to owning on your terms with the aid of these loans. When life, family, career, or just cheaper mortgage rates beckon, you may move on after residing in a location for a few years.

Want to know more? Want to talk about your real estate needs? Give us a call or text to 210-418-0067 or email Ray@KandE.Realty

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