Here is a quick update after I scan mortgage investor pricing this morning.
As mortgage rates experience upward pressure one thing of interest is the widening of the spread of the interest rate on the 30 year fixed rate mortgage as compared to the 5/1 ARM.
That spread is opening up to about 1.5 points.
For example, if a 30 year fixed rate prices at 4.25% for a particular loan scenario the corresponding rate on the 5/1 ARM is running around 2.75%.
As this spread opens up it makes sense to compare the ARM programs in your mortgage product selection. Why? It can save you a lot of money.
ARM loans went out of favor during the financial crisis as homeowners and homebuyer's became more risk averse. However, every loan has its purpose. What happened in the years leading up to the financial crisis was the misapplication of loan programs to borrower scenarios.
For example, a first time homebuyer with limited financial reserves should never be put on an Option ARM program with the potential for negative amortization that they do not understand.
However, a borrower with substantial financial liquid reserves with a varied income stream might find this loan program to match up perfectly for them.
Back to today, if you are buying a new home you should consider the ARM programs in your program selection.
However, make sure you enlist the professional advice of someone who truly understands how these programs work and when they best match up to your situation.
That is how I advise my clients across all 50 states. I'm happy to help you, just reach out to me and we can discuss how.
Visit My Website for Contact Information
No comments:
Post a Comment