Keeping it Real (Estate) with Deanna - When an adjustable rate can be a good thing

When an adjustable rate is a good thing

Adjustable rates can be a good thing. 

After the mortgage crisis, an adjustable rate became a bad word and anyone who would want one a fool. However, given the right circumstance they might not be so bad.

While ARMs did get an awful lot of people in deep water they have since been regulated and can be beneficial to people planning on living in a home seven years or less. In a nutshell they can shave off hundreds on a payment as rates are as low as 2.375 percent.  Now they aren’t for everyone and they do not provide the security that a 30-year fixed mortgage does, however, if you know you are only going to be in a certain home/area for a few years, they are worth looking into.  Rates are often fixed until after the seventh year and then can only go up to a certain maximum.  Some have a lifetime cap of 5 percent above the starting rate.  If you locked in at 2.375 and the rate can only go up 5 percent higher, then your rate would be under 8 percent, lower than what the best rate was not that many years ago.

Have a real estate question?  Give me a call or send me an e-mail.



Deanna Howard, Realtor, SFR, CREN
Iowa Realty
10th Street
Marion, Iowa 
(319) 929-3836


Licensed in the State of Iowa

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