Becky asked:


We currently have a home loan on our house, but we just sold. We just recently got an excellent locked-in rate that we hate to give up but we have to move. We found a house and want to put in an offer today. Thing is, with the previous ARM loans we had, we almost got foreclosed on (we pushed on through and never did) and now our credit is not as great as it once was. In a perfect world, we could just use our same mortgage company and they could just “transfer” our loan from one house to the other. In reality, can this happen? Or can something similar happen? My husband was reading about loans, but the brokers use all these words that make no sense to real people and he doesn’t want to get screwed in the end. Anyone know the best way to go in this situation? Any advice at all is much appreciated! Oh, and a loan on the house we want would be a bit lower than our current loan, if that helps.

CODY

Kristin Abouelata – Home Loans asked:


When deciding upon a home mortgage, one of the most common options to consider other than a fixed rate loan is an ARM loan. ARM is an acronym for adjustable rate mortgage. With this product, a starting rate is fixed for a certain period of time, and then when that time is up, the rate can adjust depending upon a pre-determined index and margin. This period can be from anywhere of 1 month or 10 years, and can reflect principal and interest or sometimes interest only payments. The adjust results in the mortgage payment either increasing or decreasing. There is also a cap on how much the interest rate can go up or down.

Many people today are afraid of ARM loans and automatically only consider a fixed rate loan when applying for a mortgage. Depending on the market, this philosophy is sometimes the most economical route. But many times it may be worth your while to consider an ARM loan.

Within the past year or so, there wasn’t any real discernable advantage to considering an ARM over a fixed rate loan. The rates were comparable. But lately, the rates in general have crept up and, when comparing them, the ARM rates can have a healthy edge.

When I take a loan application, I ask my customer what their future plans are. Only going to be in town for a couple of years? Do you work for a company that relocates often? Do you plan to expand your family any time soon? Answering yes to any of these questions is a trigger for me to present an ARM loan as an option. The average homebuyer only stays in their home 7.5 years. I recently had a customer who knew she would be in town for only 3-4 years. The difference between a fixed rate and an ARM rate was .375%. The ARM rate was fixed for 5 years before any adjustment would occur. No brainer.

There are a myriad of mortgage products out there for the consumer to consider. Ask questions of your loan officer, and more importantly, expect your loan officer to ask questions of you. And if you can’t sleep at night because you know that one day that ARM loan can adjust, just remember one thing. You can always refinance your loan when that time comes. Now, get some sleep.

Kristin Abouelata mortgage website



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