Page 47 - AAGLA-APR 2022

Member Update
Adjustable-Rate Mortgages Are Back in Full Swing By Laura Hertz, Loan Officer, CSMC Mortgage
djustable-rate mortgages typically have one of these types of loans. According to The Mortgage a low introductory rate, which translates Reports 2022, the average period a person holds a mortgage to more affordable monthly mortgage loan is under 10 years, and typially only for 5-7 years for first payments initially. An adjustable-rate time home buyers.
(sometimes called a “variable” or a “floating” rate) is an interest rate on a loan that fluctuates over time because
it is based on an underlying benchmark interest rate or index that changes periodically. Some of these adjustable- rate mortgage products even offer interest-only fixed and adjustable loans where you’ll only pay interest (no principal) for a set period. During this time, since your monthly payments will be lower, you are able to “free up” your cash for other purposes, or you can choose to increase your monthly mortgage payments to also pay down some principal.
Most of the better adjustable-rate loans are for a fixed period such as a 3, 5, 7 and 10 years, and then change to an adjustable rate of interest. Following the fixed term, most adjustable-rate loans turn into a variable rate loan based on different marginal rates such as LIBOR or the Federal Funds rate, and they contain provisions that limit the maximum rate or rate “cap” that may be charged, which are always important to understand before you obligate yourself for
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The lower rate adjustable loans require at least a 20% down payment or equity in the property. These options work for owner occupied loans as well as non-owner-occupied loans. Currently, adjustable rates start at the low 3% range and could dip into the 2% range for an owner occupied property. Since fixed rate mortgages and home prices have increased, the adjustable rates are a great alternative today.
Please contact me for the latest mortgage rates and terms, and to get more information at (805) 724-0755 or laurahertz@ csmcmortgage.com.
The author, Laura Hertz, is a Loan Officer at CSMC Mortgage located in Westlake, California. For more than 25-years, Laura has been a leading mortgage consultant and she specializes in single-family and 1-to-4-unit investment properties. Her approach to lending is to always be upfront and honest with clients, and proactively guides borrowers through the loan process from beginning to end. For more information, contact Laura at (805) 724-0755 or laurahertz@csmcmortgage.com.
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