Are Adjustable Rate Mortgages for You?

Over the past couple of weeks, we have untangled the rumors surrounding Adjustable Rate Mortgage (ARM) products and put common misconceptions to rest. But, regardless of the integrity of the ARM products, they are not for everyone. For others, they equate to an incredible savings when purchasing Pennsylvania new homes.

Let’s first talk about who they work for:

• First-Time Buyers – The average first-time buyer only lives in their first home for 3-5 years. Saving anywhere from $1,000 – $5,000 a year is pretty attractive for someone just getting started.

• Relocaters – You know who you are. If you want to keep climbing the corporate ladder, then it may take a few cities and offices to get there. If you know your job will force you to move every 3-5 years, then an ARM makes perfect sense.

• The Average Home Buyer - Again, the average person (not first-time) lives in a residence for 5-7 years. The problem is predicting this timing. As jobs change, kids come, or kids living needs change, those “forever” PA or WV new homes quickly become outdated and homeowners are left looking for more (or less). If only we had a crystal ball, then it would be much easier to know if we should go fixed mortgage or adjustable rate!

Who it is NOT for:

• The Optimist – What do we mean by this? This is the person who is banking on the huge promotion or that their business will go gangbusters. If your income just barely squeaks through to qualify at the lowest interest rate, it does not speak well to your odds a few years down the road unless you have a guaranteed contract in place.

• The Downsizer – If this is your retirement home, chances are you are seeking payments that will go down over time or remain consistent. Most downsizers will live in their homes longer than 5 years and are on fixed or limited incomes – not a good mix for an ARM.

Of course, there are exceptions to everything, and that is why taking the time to speak to a mortgage consultant about your particular financial scenario is truly the best way to find a program that fits you.

We’d love to hear from you. Let us know if you’re considering an ARM.

For more information about ARMs or our PA and WV new homes, visit the S&A Homes website.

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