30-Year Fixed vs. 7/6 ARM — Which Mortgage Is Right for You? Thinking about going ARM to save on interest? Here’s what you really need to know in today’s market: ARM rates aren’t much lower right now — the yield curve is flat. Today’s rates (around 6.5%) are actually normal historically ARMs only make sense if you’re sure you’ll sell or refinance before the rate adjusts. Always compare total payments, not just the rate. Still unsure? Let’s run the numbers together. Reach out today!
Tag: ARM
What is a hybrid ARM?
The most common ARM products we originate are hybrid ARMs. With a hybrid ARM the interest rate is fixed for an initial period of time before it reaches an adjustable rate period.
3/1, 5/1, 7/1, & 10/1 ARM’s– The most common hybrid ARM’s are the 3/1, 5/1, 7/1, and 10/1 ARM’s. With these loan products a borrower is able to lock in an initial interest rate for 3,5,7, & 10 years respectively. In most interest rate environments the borrower is able to lock in a lower rate for these initial periods than if they were locking into a 30-year fixed rate. Since most homebuyers do not stay in the same home or keep the same mortgage for more than 5 years these loans can provide the same level of interest-rate security as a fixed rate mortgage with a lower interest expense. After the initial fixed interest rate period is up these loans then go into an adjustable rate period where the interest rate will adjust either annually or every six months.