Tallahassee Real Estate Blog

Adustable rate mortgages are one of the loan products blamed for the housing market problems of the past years.  Many ARMs were structured so that payments became unaffordable after the first year.  But as the Wall Street Journal real estate blog reports, ARMs may be a good bet for homeowners including those in Tallahassee.

Not all ARMs are set up to make homeowners fail.  Traditional ARMs have a fixed rate period of 3 or 5 years.  After that, the amount of rate increase or decrease is limited by an annual "cap" usually 1-2% point.  The amount of adjustment over the life of the loan is limited by a lifetime cap, often 6% points.  WSJ real estate blog quotes Cameron Findlay, chief economist at LendingTree.com as saying it seems unlikely that rates will peak so high in coming years as to make monthly payments unaffordable for homeowners. 

Why take the chance?  Big savings.  Rates on ARMs are at a historically wide "spread" compared to fixed rate - ARMs are about 1.3% points cheaper than fixed.  For a typical Tallahassee home, that could translate into $10,000 of interest savings over 5 years.

Want to know if ARMs are right for you?  Call us at 850.445.2476 - we'll answer any questions you have and provide several lenders in Tallahassee that can give you details on whether an ARM or fixed loan is right for you.