10/1 Adjustable Rate Mortgage (ARM)
Why would I want a 10/1 ARM home mortgage loan
I you get a 10/1 ARM home mortgage loan you will pay low fixed rates for the first ten years of your mortgage. After the first ten years, your interest rate will change annually and according to the index that you and your lender agree on. People who usually get this type of mortgage plan on either moving or refinancing in ten years.
What can I use a 10/1 ARM home mortgage loan for and what are my options
A 10/1 ARM will help you buy a primary or secondary residence. This mortgage should work well for you if you need low monthly payments. However, you must be aware that after your initial fixed rate period is over, you interest rates can go up substantially. You must be financially prepared for such a situation to avoid foreclosure. Some alternative terms for a 10/1 ARM are the 7/1 ARM, 5/1 ARM, 3/1 ARM, 2/1 ARM and 1/1 ARM.
Why should I get a 10/1 ARM home mortgage loan?
The fixed rate you will pay in the beginning of your 10/1 ARM will be much lower than an interest on a Fixed Rate Mortgage. If your budget can handle the subsequent fluctuations in interest rates, this may prove to be a good option for you. You will get the best of the Fixed Rate Mortgage and Adjustable Rate Mortgage.
How can I get a 10/1 ARM home mortgage loan
We would be happy to help you apply for a 10/1 ARM. Click here to fill out an application.
How can my FICO/Credit Score affect my mortgage rate
Your FICO and Credit Score are important factors in determining your mortgage rate. We suggest that you start by getting your free online credit report and score so you can see where you fit in on the credit scale. If you score between 720 and 850 you are A-Paper; you have good credit. Anything below 660 will make it hard for you to find a lender even though the cutoff for Sub-Prime or Non-Prime lending is 620.
Q: How long will I have to make payments after my first ten years?
A: Most 10/1 ARMs are fully amortized (paid) in thirty years.
Q: What kind of down payment do I need to have for a 10/1 ARM?
A: It will vary depending on your situation and lender, but expect to pay somewhere between 5% and 10% of the purchase price of your home as the down payment.
Q: What if the interest rates rise after my initial fixed rate period is over?
A: This is one of the problems with adjustable rate mortgage loans. We advise after your initial fixed rate period is over, that you refinance and lock into a fixed rate mortgage.