Adjustable Rate Mortgage

What is It

Benefits

Convertible Adjustable Rate Mortgage

· You can convert an adjustable rate mortgage into a fixed rate mortgage after a period of time

· Usually, the period of time ranges between second and fifth year

· You can convert your adjustable rate mortgage into a fixed rate mortgage

· Security against rising interest rates

· Lower your interest rate

Super Seven Mortgage

· You get lower than average market interest rate for a period of time, usually 7 to 10 years.

· After that period your mortgage loan interest rate is adjusted to current market norms

· Also called Two-Step Mortgage and Premier Mortgage

· You get a below market interest rate for a period of 7 to 10 years

Fixed Period Adjustable Rate Mortgage

· You can get a fixed interest rate for a period ranging from 1 month to 10 years

· At end the fixed period the mortgage loan becomes an ARM

· Low initial monthly mortgage payments

· Allows you to have greater cash flow

· Use your cash flow efficiently to save or invest the difference

Option Adjustable Rate Mortgage

· You have the flexibility of choosing several mortgage payment methods, in order to better manage your monthly cash flow

· Four major types of payment options:

1. Minimum Payment: your monthly mortgage payment is set for one year at your original interest rate. After which, your payment changes yearly, and a cap limits how much your payment goes up or down annually

2. Interest-Only Payment: Avoid deferred interest, pay only the interest. Doesn’t reduce principal

3. Fully Amortizing 30-Year Payment: payment includes interest and principal

4. Fully Amortizing 30-Year Payment: accelerated monthly payments. Pay your loan twice as fast as a 30 year old payment

· Gives you choice in mortgage payment methods

· Helps you improve your cash flow

Lender Buydown

· You receive an initial discounted rate which progressively increases to an agreed-upon fixed rate during a period of three years.

· Great way to lower monthly payments for the first 24 months.

· Use the extra cash for anything you need

· After the first 3 years, the interest becomes fixed

Graduated Payment Mortgages

· Your payment will start at a low rate and rises by a fixed rate over time, usually rising annually for five years

· Mortgage Loan is negatively amortized during the initial years of the loan and principal is paid in later years.

· Low initial payment may qualify you for a larger mortgage loan

· Graduated payment mortgage may be an alternative to a standard fixed rate mortgage