Lori Blank & Associates

Real Estate

  • Search MLS
  • Our Listings
  • Home Market Value
  • Our Agents
  • Communities
    • Gilbert
    • Gold Canyon
      • Apache Junction
      • Entrada Del Oro
      • Gold Canyon East
      • Mountainbrook Village
      • Peralta Trails
      • Superstition Foothills
      • Superstition Mountain
    • Mesa
    • San Tan Valley
    • The Foothills at Gold Canyon
  • Blog
  • Contact

Comparing Mortgage Rates For Adjustable- And Fixed-Rate Mortgages

January 12, 2011 by Lori Blank

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

For some homeowners, electing to take an adjustable rate mortgage over a fixed rate one can be matter of budgeting. ARMs tend to carry lower mortgage rates and, therefore, lower monthly mortgage payment as compared to a comparable fixed rate loan.

Relative to fixed rate mortgages, current ARM pricing is excellent. Freddie Mac’s weekly Primary Mortgage Market Survey puts the 5-year ARM mortgage rate lower than the 30-year fixed rate mortgage rate by 1.02 percent.

On a $250,000 home loan, a 1.02 differential yields a payment savings of $149 per month.

ARMs are not for everyone, of course. Over time their rates can change and that can frighten people. An ARM can finish its respective 30-year lifespan with a mortgage rate as much as 6 percentage points higher from where it started. Some homeowners won’t like this.

Other homeowners, however, won’t mind it. For this group,  the ARM can be a terrific fit. Especially with the huge, relative discount in today’s pricing.

A few scenarios that should warrant consideration of a 5-year ARM include homeowners that are:

  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

In addition, homeowners with existing ARMs due for adjustment may want to refinance into a new ARM, if only to push the first adjustment date farther into the future.

Before choosing to go with an ARM, speak with your loan officer about how adjustable rate mortgages work, and their near- and long-term risks. Payment savings may be tempting, but with an ARM, payments are permanent.

Filed Under: Adjustable Rate Mortgages Tagged With: ARM, Freddie Mac PMMS, FRM

Lori Blank & Associates, LLC
LORI BLANK Broker / Owner / CRS / ABR / GRI / REOS / RECS

6140 S Kings Ranch Road
Gold Canyon, AZ 85118
Main Phone: (480) 983-8383
Cell Phone: (480) 221-7922

New Listings/Pending
Closed Sales
Open Houses

Get a Free Rate Quote →

How can we help?

  • This field is for validation purposes and should be left unchanged.

Connect with Us!

Article Categories

Recent Articles

  • How To Get A Mortgage If You Are A Gig Worker
  • Do Not Procrastinate On These Spring Maintenance Tasks
  • 7 Inexpensive Upgrades You Can Make To Your Rental Property
  • What’s Ahead For Mortgage Rates This Week – April 12, 2021
Equal Housing

Looking for something?

Our Location

Main Office
8676 E Canyon Estates Circle
Gold Canyon, AZ 85118

Branch Office
6140 S Kings Ranch Rd
Gold Canyon, AZ 85118

Copyright © 2021 · Powered by MySMARTblog