When Should I Choose an Adjustable Rate Mortgage?

Today's Adjustable Rate Mortgages (ARM) are much more stable than their predecessors. The uncertainty of the amount of your next month's mortgage payment was considered too much a financial risk. Homeowners wanted the security of knowing that their most important investment would not transform into a burden on their income. Regardless of the initial lower rate advantage of ARMs, fixed rate mortgages have always been considered the wisest choice.

Times have changed. Families are on the move. Traditional Thirty Year Mortgages are too inflexible for the contemporary lifestyles of today. People want to have access to a more positive cash flow month to month. They want to use and control their funds in more creative and aggressive ways to secure their financial futures. ARMs are the answer.

There are many programs available that can accommodate your particular needs. Mortgage products range from Negative Amortized, Balloon Payments, Interest Only, One-Time Adjustable Rate, Etc. Depending on your goals, these programs can be tailored to get you the results you want and need.

Imagine having access to your property's future equity right now. Instead of making payments that have part of it goes directly to principle, you keep it. Current low rates of the ARMs allow you to pay less on your mortgage. This results in more cash in your pocket every month. Even though the thirty- year fixed rates are at forty-year lows, they are still the highest rates available. You are required to pay the principle and interest every month without fail.

Negative Amortized Loans are very popular right now because it has multiple payment options to choose from every month. You can choose to make a minimum payment, an interest only payment, principle and interest payment or a 15 year amortized payment.

There are also products that have a combination of both Fixed and Adjustable Rates. They begin as a low fixed rate for 3, 5 or 7 years and then adjust one time to the 30 year rate at that time for the remainder of the loan.

Interest Only Loans give you the option to pay the interest due for that month. Even though you are not making and payments toward your principle, the equity in your property will continue to increase during that time.

With the economy precariously balanced, most people are refinancing about every 5 to 7 years. In an effort to get the lowest rates, borrowers are incurring more costs with every refinance they do. ARMs, with all their options, are already in a position to clutch and brake with market and economy. In short, you can control your mortgage instead of it controlling you.

Michael Dunne is a Senior Loan Officer for Security Pacific Financial. Mike's success is due to his philosophy of providing the customer with quality product and delivering it on time with impeccable service. Michael's ability to build genuine rapport in addition to his knowledge in the industry provides his borrowers with a sense of security.
Michael lives by the beach in San Clemente, California with his son, Chance, where they both enjoy the surf.