(703) 802-2850

The Kathy O'Neal Team

Real Estate in Chantilly Blog

Comparing Adjustable and Fixed Rate Mortgages

Comparing FRM to ARM mortgage rates (January 2010 - January 2011)

ARM home loans are definitely not for everyone.  Approach them with lots of awareness and caution.

That said, there may be some situations where they should be at least considered.

Compared to a fixed rate mortgages, current ARM pricing is very attractive.  Freddie Mac’s weekly Primary Mortgage Market Survey places the 5-year ARM mortgage rate lower than the 30-year fixed rate mortgage by 1.02 percent.

For a $250,000 home loan, a 1.02 difference means a payment savings of about $149 monthly.

Here are a few situations where it may be smart to at least look at ARM options::

  1. Buying a new home with the intent to sell within 5 years
  2. Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
  3. Interested in low payments; comfortable with longer-term rate and payment uncertainty

Also to consider, if you are a homeowners with an existing ARM that is due for adjustment, you may want to refinance into a new ARM, if only to push the first adjustment date farther into the future.

We always recommend you confer with your loan officer about your options.  If you need a few referrals, we always have a few loan professionals that have served our clients well, and will be happy to give you their contact information.  Let me know if this would be of any help.