How To Get the Best Mortgage Rate, best mortgage rate.#Best #mortgage #rate

How to get the best mortgage rate

The day has come: It’s time to buy a home.

But, the average home costs more than $260,000, and since you likely don’t have that kind of cash sitting in a savings account, you’ll need to borrow most of that amount from a lender and spend a decent portion of the rest of your life paying it back, plus interest.

Your mortgage interest rate, then, is a big deal. Lower your rate by a percentage point or two, and you’ll save hundreds of thousands over the course of the loan.

Here’s how to get the best mortgage rate.

Get the best rate

1. Improve your credit score. A higher credit score shows banks that you’re less of a risk to default on your loan, which means you’ll pay less to borrow money. How much less? Borrowers with the highest credit range, from 760 to 850, looking for a 30-year fixed mortgage would pay $164,000 in total interest, according to, or about $33,000 less than someone with a mediocre score of 660 to 679.

If you need to improve your score, make sure you’re spending no more than 20 to 30 percent of your available credit limit, not carrying credit card debt and paying all your bills on time. Also, get your free credit reports from or myBankrate, and look for any mistakes.

2. Have a record of employment. Banks also think you’re less of a risk if you can show at least two years of steady employment and earnings, especially from the same employer. They’ll want to see pay stubs and W-2s. Those who are self-employed, or wrapped up in the gig economy, will have a more difficult time.

3. Cough up some cash. You’ll generally score a lower mortgage rate if you put more money down, with 20 percent being the gold standard. Lenders, of course, accept a lot less than that, but you’ll often have to pay private mortgage insurance, which can range from 0.5 to 2.25 percent of the original loan amount per year. You’ll also want to have two to three months’ worth of cash reserves in a savings account.

Check out other rate options

America’s love of the 30-year fixed-rate mortgage is rare among developed nations, and it may not be the best loan for you.

4. Go short. An adjustable-rate mortgage with a five- to seven-year low-interest introductory period may make sense for you – but only if you’re looking to sell the house and trade up quickly, aka less than five to seven years. The average mortgage rate for a 5/1 ARM is 3.47 percent as of Aug. 30, compared with 3.97 percent for a 30-year fixed.

5. Go medium. If you’ve found your dream home, or just can’t bear the thought of moving again, consider a 15-year fixed-rate mortgage. The national average is only 3.2 percent. On a $260,000 loan, your monthly payments will be considerably higher ($1,821 vs. $1,237 for a 30-year fixed), but you’ll save $120,000 in interest.

6. Shop around. When searching for the best rate, even for refinancing, you want to play the field. That means not settling with the financial institution where you normally bank. Research online.

Be ready

7. Move quick. While the yield on 10-year Treasuries, which mortgage rates are pegged to, remains low, the Federal Reserve’s decision to unwind its trillion-dollar balance sheet might raise longer-term rates over the next year or two. Home prices are rising quickly, thanks to a tight housing market, so you’ll have to act fast.

8. Lock in. After you sign the purchase agreement and have secured your mortgage loan, ask your lender how long it usually takes to process the loan and see if they will lock in your rate. This sometimes comes with a fee, especially if longer than two months, but it might pay for itself if you think rates may rise.

Mortgage Calculators: Amortization Tables, Accelerated Payments, Biweekly Payments, lowest mortgage rate.#Lowest #mortgage #rate

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Lets you determine monthly mortgage payments and see complete amortization tables.

Lowest mortgage rateHow Advantageous Are Extra Payments?

By making additional monthly payments you will be able to repay your loan much more quickly. Find out how your monthly, yearly, or one-time pre-payments influence the loan term and the interest paid over the life of loan. Make additional 1/12 of monthly payments (a popular ‘do-it-yourself’ biweekly) or an additional monthly payment once a year.

Lowest mortgage rateSimple Option ARM Calculator

Computes minimum, interest-only and fully amortizing 30-, 15- and 40-year payments.

Lowest mortgage rateAdvanced Option ARM Calculator with Minimum Payment Change Cap

Allows you to create a complete option ARM loan amortization table (with standard and neg-am recasts, automatically estimated possible future index changes, various fixed payment periods, interest rate rounding to the nearest 1/8 of one percentage, and more). See what happens if you always select the minimum payment option.

< Please see: Using Pay Option ARM Calculator

Lowest mortgage rateWhich ARM Index Is Better?

Lowest mortgage rateMortgage Pre-Qualifier

Mortgage Pre-Qualifier will determine the income required to qualify for the particular loan using the specified qualifying ratios.

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The calculator lets you see how various changes to your income, liabilities, and mortgage terms affect the loan amount you can borrow.

Lowest mortgage rateBlended Rate Calculator

Calculates a first and second mortgage blended rate.

Lowest mortgage rate‘True bi-weekly’ payment calculator

Prints yearly amortization tables. With bi-weekly payments, you pay half of the monthly mortgage payment every 2 weeks, rather than the full balance once a month. This is comparable to 13 monthly payments a year, which can result in faster payoff and lower overall interest costs.

Lowest mortgage rateAnother ‘true bi-weekly’ payment calculator

Builds complete bi-weekly amortization tables.

Lowest mortgage rateTrue bi-weekly vs standard bi-weekly

Shows how much you will save if you calculate interest for two-week intervals and apply the bi-weekly payments less the interest to reduce principal every two weeks, instead of having your money withdrawn from your bank account every two weeks by your lender and making a full mortgage payment once a month plus one additional payment once a year out of a special account, managed by the lender. Complete amortization tables are available.

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Workers Credit Union Mortgage Housing Loan, jumbo mortgage rate.#Jumbo #mortgage #rate



Jumbo mortgage rate

All Workers Mortgage loans and products are included in the GiveBack Program.

Jumbo mortgage rate

First Time Homebuyer Mortgage Loan

Buying your first home is a big investment, Workers offers low rates for first time homebuyer mortgages and even reduced closing cost options. Our professional mortgage lenders will help you find a financing options that fits your needs.

  • Get pre-approval before house hunting
  • First-time homebuyer loan programs including FHA* USDA*
  • Mortgages loans with fixed and variable rates
  • VA Mortgage loans* for current and past military personnel
  • Jumbo mortgage loans for amounts greater than $425,000
  • Reduced Cost Closing Option
  • HomeAdvantage TM to earn rebates
  • Free home appraisal credit at closing

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*VA, FHA USDA Mortgages are not included in the GiveBack Program.

Construction Loans

If you are building your new home, speak with a Mortgage Professional about a Workers Construction Loan.

  • Fixed, 7/1, and 10/1 Adjustable Rate Mortgage options
  • Lend up to 80% of the sum of the construction cost and purchase price/value of land
  • Maximum 30-years after completion of the construction period
  • Nine month construction period
  • Construction loans are for owner-occupied residence properties

Call 978-345-1021 ext. 5403 to speak with a mortgage lender today or email us.

*Adjustable Rate Mortgage (ARM) rates effective as of for purchase and refinance of 1-4 family owner-occupied properties. A 5-year term with an interest rate of 3.500% and an Annual Percentage Rate (APR) of 3.992% is based on a $100,000 loan at 75% Loan-To-Value (LTV) at a cost of $4.08 per $1,000 borrowed. Caps 2% per adjustment and 6% over the lifetime of the loan. Index is 1-yr Treasury Bill. Margin is 2.50%. Maximum loan amount of $2,000,000 at an 80% LTV. For complete details, please contact Workers Credit Union. Workers Credit Union membership required, simply open a $5 membership account and you ll be a member!

Jumbo Mortgage


A Jumbo Mortgage loan is a home loan greater than $425,000.

They are available with 15, 20 and 30-year terms, as well as 5/1 and 7/1 Adjustable Rate Mortgages.

  • Online Pre-approval or Pre-qualification
  • Purchase or refinance your mortgage
  • Expert Mortgage Originators, including one in our Call Center
  • HomeAdvantage TM to earn rebates

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*All Annual Percentage Rates (APRs) are based on $480,000 loan to purchase a single family primary residence at an 75% Loan-To-Value (LTV) and a FICO Score of 740 or greater unless otherwise noted. Jumbo mortgage limits: 1 family $2,000,000 at 80% LTV. Lesser loan limits apply on LTVs greater than 80%.

Mortgage Refinancing

Refinancing your mortgage involves paying off your current home loan and replacing it with a new one. The mortgage professionals at Workers can walk you through all your options for mortgages refinancing.

Benefits of a Workers mortgage refinance:

  • Reduce your monthly payments
  • Refinance your adjustable-rate to a fixed-rate
  • Shorten your loan terms to pay off your mortgage faster
  • Use your home s equity for large home improvement projects

Refinancing costs:

  • Appraisal fees
  • Closing/attorney fees
  • Recording fees
  • Credit reports
  • Underwriting fees
  • Private mortgage insurance
  • Loan origination fees

To find out about refinancing your mortgage is right for you visit our Online Loan Consultant, contact a Workers mortgage lender at 978-345-1021 ext. 5403 or email us.

Finish Line Refi Mortgage


AS LOW AS – 3.50% APR 1


AS LOW AS – 3.75% APR


AS LOW AS – 3.99% APR

A Workers Finish Line Refinancing mortgage is for those who are looking at retiring soon or want to pay off their home loan.

  • No closing cost
  • $399 non-refundable application fee
  • Fast approval process and closing
  • Other refinancing rates for a Workers mortgage are available

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

1. The Annual Percentage Rate (APR)is fixed, effective as of and includes a 0.50% discount with electronic loan payments from a Workers Credit Union checking account. APRs are subject to change at any time. A 7-year term with an interest rate of 3.50% ;is repayable in 84 monthly installments of $13.44 per $1,000 borrowed. 2. A 10-year term with an interest rate of 3.75% is repayable in 120 payments of $10.01 per $1,000 borrowed.A 12-year term with an interest rate of 3.99% is repayable in 144 payments of $8.75 per $1,000 borrowed. Minimum loan amount $50,000. Minimum term of Finish Line Refi is five years, or 60 months and maximum term is twelve years, or 144 months. Borrower is responsible for property insurance and any cost or fees required by their current lender to have the loan refinanced with Workers Credit Union. Maximum loan amount not to exceed 80% of property value for the refinance of a single family owner occupied primary residence and not exceed 75% of property value for an owner occupied second home residence. The program is available only for refinances only of single-family, owner occupied residences and is not available to refinance current Finish Line Refi loans. Requires active direct deposit into a Workers checking account within 60 days of Finish Line closing. Workers Credit Union membership required. Open a $5 savings account when you close your loan and you will be a member. Other restrictions may apply.

Adjustable Rate Mortgage

5/1 Adjustable Rate Mortgage*

3.500% RATE 3.992% APR**

A 30-year term adjustable rate mortgage can give you more options when trying to finance your home. Starting with a lower interest rate on a housing loan can open more doors.

This is the ideal mortgage if you:

  • Want to maximize your buying options for a mortgage
  • Have lower payments during the first few years of your mortgage
  • Plan to move within or pay-off within the next ten years
  • 7/1 and 10/1 ARMs are also available.
  • HomeAdvantage TM to earn rebates

Call 978-345-1021 ext. 5403 to speak with a Workers mortgage lender today.

*Adjustable Rate Mortgage (ARM) rates effective as of for purchase and refinance of 1-4 family owner-occupied properties in Massachusetts only. **A 5-year term with an interest rate of 3.500% and an Annual Percentage Rate (APR) of 3.992% is based on a $100,000 loan at 75% Loan-To-Value (LTV) at a cost of $4.08 per $1,000 borrowed. 5/1 ARM available single family owner-occupied property in Massachusetts. 7/1 and 10/1 ARM rates are available for construction loans. Rates on ARMS may increase after closing at applicable adjustment term. Caps 2% per adjustment and 6% over the lifetime of the loan. Index is 1-yr Treasury Bill. Margin is 2.50%. Maximum loan amount of $2,000,000 at an 80% LTV. For complete details, please contact Workers Credit Union. Workers Credit Union membership required, simply open a $5 membership account and you ll be a member!

Best Variable – Fixed Mortgage Rates Toronto, Home Mortgage, Northwood Mortgage, best rate mortgage.#Best #rate #mortgage

Our Best Home Mortgage Rates Toronto – Fixed Variable

Our lowest mortgage rates change frequently as we often receive short-term rate promotions daily. These promotions are never posted online. Meet with one of our Mortgage Agents to get the best mortgage solution for you!


  • 10 Year Fixed Rate Special 3.94% Your last mortgage ever
  • 5 Year Variable rate mortgage Insured at Prime .95% (2.25%)
  • Open line of Credit at Prime + .50% (3.70) some conditions apply

Many of our rates can be guaranteed for up to 4 months! This means if you secure a mortgage in April, the rate is guaranteed until August

If you are buying a home (in Canada) now, or switching from a current lender, you can secure these rates NOW by contacting us today.

Rates subject to change without notice and OAC Some Conditions Apply

Mortgage Rates

When mortgage rates change, it can happen quite quickly. So when it comes to mortgage, timing is everything. Be sure to secure your loan while rates are favourable in order to get the best deal possible. Also, if you are looking to buy a home or you are thinking about changing from your current lender, you ll want to do your research before you make any final decisions.

Remember, all mortgages aren t created equal, so it s important to compare mortgage rates and to go with a company that you trust. The terms and conditions of mortgages vary, as do the interest rates. A mortgage should be set up to fit your needs as much as possible. We want to equip you with the knowledge you need to make the best decision.

What is an open mortgage?

An open-term mortgage is an appealing option to those who plan on paying off their mortgage sooner rather than later. This type of mortgage can be repaid fully or partially at anytime without prepayment interest fees. If you want to convert them to another term, you are able to do so at anytime again without prepayment interest fees. The interest rates for open mortgages tend to be higher than those of closed mortgages because they have such flexibility.

What is a closed mortgage?

A closed-term mortgage is the common choice for people who aren t planning to pay off their mortgage in the near future. The interest rates for closed term mortgages tend to be lower than that of open mortgages. With closed term mortgages, you re able to save on interest costs and hopefully this will help you to pay your mortgage back quicker. Fixed or variable options are available for closed term mortgages but there s a restriction on the principal amount that you can pay towards our mortgage each year.

If you want to renegotiate your rate, you will need to pay a prepayment charge. In addition, you will need to pay this prepayment charge, if you want to pay off the balance of your mortgage before the end of the term or if you want to prepay more money than your mortgage will allow you to.

Prepayment Charges

With prepayment charges you have the flexibility to increase your monthly payments or to pay the whole thing off. Contact our team of experts to find out more about prepayment options.

Comparison: Variable vs. Fixed Mortgage Rates

Fixed Mortgage Rates

More than 50% of Canadians have fixed mortgage rates, which means the monthly payment stays the same over the full term. You are protected against fluctuating interest rates, so it can set up and you don t have to worry about it. If you want stability this is the best option for you.

Variable Mortgage Rates

With a variable mortgage, your rates are typically lower but they will vary over the term. Your payments will be based on market behaviour and this will have an affect on how much you are paying. The amount that you are paying will change over time.

What We Offer:

At Northwood Mortgage, our dedicated and knowledgeable staff are able to provide you with our best mortgage rates.

Call us today at 1-888-492-3690 for more details.

Direct Mortgage Wholesale, Online Rate Locks, Loan Programs, Automated Underwriting System, best rate mortgage.#Best #rate #mortgage

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What People Are Saying:

“What an excellent product! I’ve already used it to price out two loans since this afternoon’s training. I am really looking forward to using this product often.” Melanie R., Florida

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Direct Mortgage Wholesale provides pace-setting rates, cutting-edge loan programs, online rate locks, and the most robust automated underwriting system in the business. More

Interested in signing up with Direct Mortgage Wholesale? Fill out our Online Broker Application or send an email to get started.

Submit Your Loan to Direct Mortgage – Instructions

Why we are different: Best rate mortgage

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In a day and age when many lenders are struggling, we are a wholesale mortgage bank that continues to innovate, create new loan programs, and pioneer automation cutting-edge technology. Our proprietary software, DirectWare Loan Choices features Predictive Analytics, assists you in selecting the right loan at the right price, including Fannie Mae, Freddie Mac, and Direct Mortgage s own loan portfolio; and provides real time pricing, loan registration and online rate locking.

  • Loan Choices with Predictive Analytics
  • Drag Drop underwriting checklist
  • FHA & VA loans and sponsorships
  • USDA loan
  • Paperless Loan Submissions
  • Lock online until 3 am Eastern, 1am Mountain Time, midnight Pacific.
  • Automatic notifications of U/W status, e.g., that loan is locked (including anticipated yield spread), clear to close, or is funded.
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  • Calyx Point lender

Furthermore, Direct Mortgage is a wholesale mortgage lender with a philosophy of “close the loan.” Whether that means educating brokers about loan products available on the market, providing free uploads of loan applications, automatically underwriting referred borrowers against alternative loan programs, or going the extra mile to personally obtain outstanding conditions on a pending loan, Direct Mortgage associates focus on getting the deal done.

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Finance – Political Breaking News Australia – Worldwide, prime interest rate today.#Prime #interest #rate #today

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A bidding war looms for the Murdoch family-led 21st Century Fox’s major television and movie production assets, after Fox was approached by Comcast and Verizon.

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Australia doesn’t seem to get it; from climate change plans to seeing that tech is a sector of the economy where we should be kicking goals.

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Huge Vic clean energy tender could boost state coffers

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“It’s difficult to see that this will be a meaningful budgetary impact for the Victorian government and I think there’s a reasonable chance it’s a net positive impact,” said energy expert Bruce Mountain.

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Current Interest Rates on Home Loans, Savings, Car loans – CD Rates, interest rate.#Interest #rate

Today’s Interest Rates and Financial Advice:

Interest rate

Financial Advice

Would you like to buy a home but worry that you’d never qualify for a mortgage? It’s time to stop guessing and evaluate your chances to land a loan based on everything from how much you make to your credit score. Believe it or not, the odds are in your favor.

November 14th 2017

The average cost of financing a new or used car or truck has stayed low over the past year, making auto loans a bargain by any historical measure. And buyers with reasonably good credit can always take advantage of the discount loans automakers are offering on many models.

November 13th 2017

Lending money to your child is risky business. But if you can avoid the personal pitfalls and convince the federal government that this is really a loan, and not a gift, the Bank of Mom and Dad can be a financial boon for everyone in the family.

November 13th 2017

Here’s how to make all of the right decisions so that you’ll save more, invest wisely and take full advantage of all the tax breaks to build your retirement nest egg.

November 10th 2017

It’s not enough to find a good location at an affordable price. Condo buyers must consider lots of extra costs, from association fees and special assessments to how well the building is maintained and how strictly it enforces rules on everything from noise to pets.

November 10th 2017

You’ve scouted out the best mortgage rate and fought hard to get the best price on your new home. But your bargaining shouldn’t stop there. Here’s how you can save on everything from settlement fees to title insurance.

November 8th 2017

Interest rate

Interest ing Snapshot

Individual retirement accounts, or IRAs, are a great way to build financial security for you and your family. They’re easy to open and our simple strategy helps you make all the right decisions now, and in the years ahead.

Interest rate

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Highest Tax Saving Bank Fixed Deposit Rates 80C – October 2017, interest rate.#Interest #rate

Highest Tax Saving Bank Fixed Deposit Rates U/S 80C October 2017

Tax Saving Fixed Deposits one of the most popular way to save taxes u/s 80C of income tax. These are like normal Fixed Deposit with banks but is labeled as “Tax Saving FD” while making the deposit.

Why you Should Invest?

  1. Convenient to invest. ICICI Bank, SBI, HDFC Bank, etc offers online facility for Tax Saving FD
  2. Redemption on maturity comes directly to your bank account
  3. High Safety FD up to Rs 1 Lakh is insured

Why you Should Not Invest?

  1. There are lot of competing products like EPF, PPF, ELSS to exaust the investment of Rs 1.5 Lakh u/s 80C
  2. The interest earned is taxable
  3. Cannot be withdrawn prematurely
  4. Cannot be pledged to secure loan or as security

Tax Saving Fixed Deposit Interest Rate

Bandhan Bank and Bank of India have reduced their interest rates (compared to last month) on tax Saving FDs.

Also State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore have merged with State Bank of India effective April 1, 2017.

As of September 4, 2017 banks are offering 6.00% 7.20% for general public and 6.50% 7.70% for Senior Citizens.

  1. The best Tax Saving Fixed Deposit Interest offered is 7.20% for General Public byThe Ratnakar Bank and IDFC bank
  2. The best Senior citizens Tax Saving Fixed Deposit Interest offered is 7.70% by The Ratnakar Bank and IDFC bank
  3. 5 Year NSC at Post Office gives 7.8% interest for both Senior Citizens and general public

The table below lists the banks in alphabetical order with their respective interest rate offer on Tax Saving FDs for General and Senior Citizens.

The highest Interest Rates have been highlighted :

Taxation TDS Tax Saving Fixed Deposits:

The interest received on tax Saving Fixed Deposit is fully taxable. The interest income is considered as income from other sources for Tax filing and taxed at marginal tax rates applicable.

TDS would be deducted at the rate of 10% of the interest paid, if the interest paid exceeds Rs 10,000 in a financial year. You can see the same in Form 26AS.

In case your income does not exceed taxable slab and so want to avoid TDS, you can submit Form 15G or 15H when making the deposit. You would also need to submit the form at the start of every financial year to the concerned bank branch.

Key Points – Tax Saving FD:

Below are some of points to keep in mind while investing in Tax Saving Deposits:

  1. As the Tax Saving FD scheme was introduced in Budget of 2006, it s also known as Tax Saving Deposit scheme 2006 (Notification Number 203/2006 and SO1220 (E) dated 28/07/2006)
  2. Most of the banks accept deposit of 5 Years only. However there are banks with deposit tenures of more than 5 Years
  3. You can deposit on either Single or Joint name. However benefit of tax deduction is available for first holder only.
  4. Most banks offer interest rate which is similar to their 5 years term deposits. Only a few banks give slightly higher interest rate for their Tax Saving Fixed Deposits
  5. Most banks give Senior citizens and their staff members additional interest of 0.25% to 0.5%
  6. Depositor can opt for either cumulative or non-cumulative way of crediting periodical interest
  7. Don’t be mislead by banks advertisements about their yield on Tax Saving FDs. Those are manipulative calculations
  8. Be cautious of small co-operative banks as they have higher risk than bigger private and public sector banks
  9. Depositor gets benefit U/s.80C of the Income Tax Act. 1961
  10. Minimum deposit is Rs.100 and in multiples thereof
  11. Maximum deposit in a Financial Year Rs.1,50,000/- [i.e., 1st April to 31st March of the following calendar year]
  12. Deposits cannot be withdrawn prematurely
  13. Deposits cannot be pledged to secure loan or as security

Disclaimer: We have tried to keep interest rates up to date, but as these change frequently you are advised to check with the bank before investing. Also it would be great if you can point out any errors through comments or email!

Direct link for Interest Rates on FDs of Banks:

Below is the direct link for Interest Rates of Major Banks. You might want to check the interest rates before doing your FD.

ARM Calculator: Adjustable Rate Home Loan Calculator: Estimate 3, adjustable rate mortgage calculator.#Adjustable #rate #mortgage #calculator

Adjustable Rate Mortgage Calculator

Thinking of getting a variable rate loan? Use this tool to figure your expected monthly payments before and after the reset period.

Current ARM Mortgage Rates

Understanding Adjustable-Rates

The U.S. has always been the world capital of consumer choice. Visitors are often overwhelmed by the variety offered in our stores, supermarkets, and service industries. And the mortgage game is no different.

When making a major purchase like a home or RV, Americans have many different borrowing options at their fingertips, such as a fixed-rate mortgage or an adjustable-rate mortgage.

Almost everywhere else in the world, homebuyers have only one real option, the ARM (which they call a variable-rate mortgage).

What Are Adjustable Rate Mortgages?

An ARM is a loan with an interest rate that is adjusted periodically to reflect the ever-changing market conditions.

Usually, the introductory rate lasts a set period of time and adjusts every year afterward until the loan is paid off. An ARM lasts a total of thirty years, and after the set introductory period, your interest cost and your monthly payment will change.

Of course, no one knows the future, but a fixed can help you prepare for it, no matter how the tides turn. If you use an ARM it is harder to predict what your payments will be.

You can predict a rough range of how much your monthly payments will go up or down based on two factors, the index and the margin. While the margin remains the same for the duration of the loan, the index value varies. An index is a frame of reference interest rate published regularly. It includes indexes like U.S. Treasury T-Bills, the 11th District Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR).

Adjustable-Rates vs. Fixed-Rates

Adjustable rate mortgage calculatorEvery potential homebuyer faces this decision, and there are pros and cons to both kinds of mortgages. What you plan to do both in the near and distant future determines which loan arrangement will be best for you.

The APR of a fixed-rate mortgage (FRM) remains the same for the life of the loan, and most homeowners like the security of locking in a set rate and the ease of a payment schedule that never changes. However, if rates drop dramatically, an FRM would need to be re-financed to take advantage of the shift, and that isn’t easy at all.

An ARM is more of a roller coaster ride that you put your whole house on. It fluctuates with the real estate market and with the economy in general. The sweet five percent deal you have today could shoot up to eight percent if LIBOR goes up.

What Are The Common Reset Points?

The reset point is the date your ARM changes from the introductory rate to the adjustable-rate based on market conditions. Many consumers wrongly believe this honeymoon period of having a preset low monthly payment needs to be as short as it is sweet.

But nowadays, it is not uncommon to set mortgage reset points years down the road. Reset points are typically set between one and five years ahead. Here are examples of the most popular mortgage reset points:

  • 1 Year ARM – Your APR resets every year.
  • 3/1 ARM – Your APR is set for three years, then adjusts for the next 27 years.
  • 5/1 ARM – Your APR is set for five years, then adjusts for the next 25 years.
  • 7/1 ARM – Your APR is set for seven years, then adjusts for the next 23 years.
  • 10/1 ARM – Your APR is set for ten years, then adjusts for the next 20 years.

What is the Difference Between a Standard ARM Loan and Hybrid ARMs?

A hybrid ARM has a honeymoon period where rates are fixed. Typically it is 5 or 7 years, though in some cases it may last either 3 or 10 years.

Some hybrid ARM loans also have less frequent rate resets after the initial grace period. For example a 5/5 ARM would be an ARM loan which used a fixed rate for 5 years in between each adjustment.

A standard ARM loan which is not a hybrid ARM either resets once per year every year throughout the duration of the loan or, in some cases, once every 6 months throughout the duration of the loan.

What do Rates Reset Against?

ARMs are typically tied to one of the following 3 indexes:

  • London Interbank Offered Rate (LIBOR) – The rate international banks charge one another to borrow.
  • 11th District Cost of Funds Index (COFI) – The rate banks in the western U.S. pay depositors.
  • Constant maturity yield of one-year Treasury bills – The U.S. Treasury yield, as tracked by the Federal Reserve Board.

Who Are ARMS Good For?

Adjustable-rate mortgages are not for everyone, but they can look very attractive to people who are either planning to move out of the house in a few years or those who are counting on a significant raise in income in the near future.

Basically, if your reset point is seven years away and you plan to move out of the house before then, you can manage to get out of Dodge before the costlier payment schedule kicks in.

Others who will benefit greatly from the flexibility of an ARM are people who expect a sizeable raise, promotion, or expansion in their careers. They can afford to buy a bigger house right now, and they will have more money to work with in the future when the reset date arrives. When the reset happens if rates haven’t moved up they can refinance into a FRM.

Who Are ARMS Bad For?

ARMs are bad for worrywarts. If life’s little uncertainties make you feel queasy, you may worry about the future of interest rates every waking moment. But don’t worry – you won’t end up losing the farm (or your signed Don Drysdale baseball card) because ARMs have caps on them.

A cap is a ceiling, or a limit on the amount your loan rate can increase annually for the duration of the loan. Adjustable-rate mortgage caps are usually set between two and five percent, and they carry a maximum yearly increase of two percent.

That is not exactly risky proposition, but it can appear so to a non-gambler.

You can run the numbers in advance to estimate the monthly cost at different APRs. Our above calculator does this automatically based on the cap you enter.

Compare Your Options

Adjustable rate mortgage calculatorCompare IO ARMs or fixed, adjustable interest-only loans side by side. Adjustable rate mortgage calculator

Avantages And Disadvantages

  • Lower payments and rates early in the loan term, allowing borrowers to buy larger, more expensive homes.
  • ARM holders can take advantage of falling rates without lifting a finger, avoiding the inconvenience and high cost of refinancing, including a new set of closing costs and transaction fees.
  • It’s an affordable way for borrowers with limited funds to buy a house if they don’t plan on living in one place for a long time.
  • Rates and monthly payments can rise dramatically over the course of a 30-year commitment. A six percent ARM can skyrocket to eleven percent in as little as three years.
  • The first adjustment after your initial set period can be more shocking than any sticker you’ve ever seen because annual caps sometimes don’t apply to the first payments after the reset point arrives. Be sure to read the small print!
  • ARMs are complex agreements, and novice borrowers can easily be misled and bamboozled by slick talk about margins, caps, ARM indexes, and other industry jargon – particularly if the lender is somewhat shady.

Borrower Beware

ARMs are not for the faint-hearted. They offer a better life to those who want lower payments now in exchange for spending more down the road. But make no mistake, your monthly payments will likely increase when your rate is adjusted.

You must be prepared financially for the end of the honeymoon. Because caps often don’t apply to the one-time initial adjustment, you could see a worst-case scenario of your six percent rate adjusting to ten or twelve percent a year if interest rates in the overall economy shoot up.

If you found this guide helpful you may want to consider reading our comprehensive guide to adjustable-rate mortgages.

You can also download an ARM loan worksheet bring it to your financial institution. We offer versions in the following formats: PDF, Word Excel.

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Adjustable Rate Mortgage

Adjustable rate mortgage calculator

With Rocket Mortgage by Quicken Loans, our fast, powerful and completely online way to get a mortgage, you can find out which loan option is right for you.

Not comfortable starting online? Answer a few questions, and we ll have a Home Loan Expert call you.

Key Benefits

Get a mortgage rate as low as 3.50% (4.148% APR) with the 5-year adjustable rate mortgage.

  • Do you want to significantly reduce the cost of your mortgage?
  • Do you plan to move or refinance in the next 5, 7 or 10 years?
  • Do you want the lowest mortgage rate available?

If you answered yes to any of these questions, an adjustable rate mortgage might be right for you! Whether you choose the 5-year, the 7-year or the 10-year adjustable rate mortgage, you’ll get the lowest rate we offer and save thousands over a traditional fixed-rate mortgage during the initial fixed-rate period. Afterwards, the rate may change once per year.

Why you should choose Quicken Loans

  • Only Quicken Loans offers you the Closing Cost Cutter and PMI Advantage. Find out how these great options can help guide you to the best decision to meet your financial goals.
  • With more than 32 years of experience, we’ve designed a mortgage process that adapts to your needs.
  • Our powerful online tools, like MyQL Mobile, allow us to close your loan quickly. This app is exclusive to Quicken Loans clients and works with iPhone ® and Android™!

Other loans you might be interested in:

How It Works

Adjustable rate mortgage qualification requirements

  • Refinance up to 95% of your primary home’s value
  • Buy a home with as little as 5% down (primary home)