It’s An ARM Market And We’re An ARM Lender

November 10, 2022
edcurrie

Like a lot of people, I never thought I would see a 7.0% rate on a 30-year fixed mortgage again. But here we are. And it appears that 7.0% is the breaking point for most borrowers. Rates have simply moved too fast and too high. The result has been a significant demand in Adjustable Mortgage Rate (ARM) loans. Historically ARMs amount to about 5% of the total mortgage loans. Yes, 95% of people tend to go with a fixed rated for various reasons. In the latest surveys, ARMs now amount to about 15% of the total demand — three times higher than normal. The reason is the difference in rates between ARMs and fixed rates. Depending on someone’s credit score and other factors, a fixed rate may be 7.0% – 7.5% right now versus an ARM at 5.25% — 5.75%. And these are ARMs that have a fixed rate for 5, 7, or 10 years! ARMs are not for everyone, but here’s why they make sense right now:

Much lower rates
Rates low enough for consumer acceptability
Payment savings of about $100 per $100,000 borrowed versus fixed
Borrowers can choose from a rate that fixed for up to 10 years
Rates are expected to come down in the next 12-24 months and borrowers can refinance to a fixed rate at that time

Additionally, when clients refinance with us, there is no refinance process — no financials needed, no appraisal, and no closing. Since we own the loan, we simply lock it in and send the borrower a one-page modification form. Very simple. There’s a flat fee of $300 — $750 depending on the loan size. While we work through these high rates, ARMs can be a great option to get a “low” rate until they go lower over the next few years and not miss out on that new home purchase. If you or someone you know is thinking of buying a home, reach out to me via my website, or call 847-214-2404 to discuss ARM options that make the most sense for you. For more tips and our latest updates, check us out on Facebook, Twitter, LinkedIn, or Pinterest!

Historically ARMs amount to about 5% of the total mortgage loans. Yes, 95% of people tend to go with a fixed rated for various reasons. In the latest surveys, ARMs now amount to about 15% of the total demand — three times higher than normal. The reason is the difference in rates between ARMs and fixed rates. Depending on someone’s credit score and other factors, a fixed rate may be 7.0% – 7.5% right now versus an ARM at 5.25% — 5.75%. And these are ARMs that have a fixed rate for 5, 7, or 10 years!

ARMs are not for everyone, but here’s why they make sense right now:

Much lower rates
Rates low enough for consumer acceptability
Payment savings of about $100 per $100,000 borrowed versus fixed
Borrowers can choose from a rate that fixed for up to 10 years
Rates are expected to come down in the next 12-24 months and borrowers can refinance to a fixed rate at that time

While we work through these high rates, ARMs can be a great option to get a “low” rate until they go lower over the next few years and not miss out on that new home purchase.

If you or someone you know is thinking of buying a home, reach out to me via my website, or call 847-214-2404 to discuss ARM options that make the most sense for you. For more tips and our latest updates, check us out on Facebook, Twitter, LinkedIn, or Pinterest!