Is an Adjustable-Rate Mortgage Right for you?

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Is an Adjustable-Rate Mortgage right for you?

 

When you shop for a mortgage, whether it’s for a new home or a refinance, you’ll soon hear about adjustable-rate mortgages (ARMs). For some, an adjustable-rate mortgage is an automatic no. If that is the case, it is usually for one of three reasons:

  • They’re uncomfortable with any risk;
  • They’re unaware of just how an ARM works;
  • They can predict the future with relative certainty.

While ARMs definitely have their advantages, make sure you understand them before getting into one.

 

How ARMs work

All ARMs start out as fixed-rate mortgages for the first 3, 5, 7, or 10 years. An ARM will appear like this, where the first number in the terms “3/1,” “5/1”, or “7/1” denotes the number of years that the rate will be fixed. Usually the lower the number is, the lower the initial rate. During the fixed period, there is no risk and typically a healthy savings. The second number shows how many years before the rates can be adjusted once that fixed period has expired.

After this fixed period, the rate can fluctuate. The rate itself is made up of both fixed- and variable-rate components. The variable component will be based on some index such as Treasury bonds. This is added to the fixed-rate component set by the lender when you determine your starting rate.

Your decision to obtain an ARM should be based on how long you plan to live in this home. Having reasonable expectations for future sale or refinancing is all it can take to make an ARM worth considering. If you believe that you could be living there for a long time, you may want to consider opting for a fixed-rate mortgage. The reason? If you have an ARM and have to refinance at some time in the future when rates are higher, you might find yourself in a fixed-rate mortgage with a much higher rate.

 

Inside Information

Lenders give you a discounted rate up front because they know the rate will float with the market later on. If you sell your home or refinance again prior to that happening, it’s their loss. You have the advantage here because you control the timing of your next step.

 

Managed Risk

One way to prepare for the possibility of a higher rate and payment later is to pay extra principal each month to reduce your balance faster. If the rate ultimately adjusts up, your balance will be lower and the payment change will be less as a result. As well, you would already be accustomed to paying more.

 

The Bottom Line

A fixed-rate loan provides the certainty that it will never change. An ARM provides a guaranteed savings but for a limited period of time. The best way to decide is to balance your expectations for using any particular loan with the peace of mind that can come from being assured of stability, even if your timeframe changes.

 

ABOUT INLANTA MORTGAGE

Headquartered in Pewaukee, Wis., Inlanta Mortgage was established in 1993. The company has grown to 35 branches in 16 states and over 240 employees. Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as jumbo and portfolio programs. The company is an agency approved lender for Freddie Mac, Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs.

In 2016, Inlanta Mortgage was recently named a Top Workplace for a third consecutive year. Inlanta has been recognized as a Top Mortgage Employer by National Mortgage Professional and a Top 100 Mortgage Banking Company and 100 Best Mortgage Companies to Work For by Mortgage Executive Magazine. Inlanta has also received the Platinum Million Dollar USDA Lender Award.

PARTNERSHIP OPPORTUNITIES

Inlanta Mortgage continues to expand its branch network and encourages ethical lending professionals to learn more about our support platform and discover how an Inlanta branch partnership with Inlanta Mortgage is essential to long-term success.

Locate an Inlanta Mortgage loan officer at www.inlanta.com/locations. For current employment opportunities, visit www.inlanta.com/join-our-team/employment-opportunities. Learn more about Inlanta Mortgage branch partnership opportunities at www.inlantapartners.com, call 262-439-4260, or email partners@inlanta.com.

Inlanta Mortgage, Inc. NMLS #1016.

Renting vs. Owning

rentvsownRenting Vs. Owning

 

Renting vs. Owning is one of the greatest debates consumers face. What are the pros and cons of each? Which option is cheaper? What is better for my current lifestyle? These are some of the questions renters face when trying to decide whether home-ownership is the right choice for them.

Contrary to popular belief, renting may not actually be cheaper than owning your own home. Rent prices are on the rise and starting to exceed the cost of a mortgage payment, and there are many other benefits to home-ownership that you may not have thought of, such as investment opportunity, tax deduction, stability, and freedom.

 

Investment Opportunity

Some people say investing in a home is risky; but with no risk, there is no reward. Studies conducted by the Federal Reserve have shown that owning can provide a net worth that is from several to hundreds of times higher than that of renters. When you own, improving your home increases its value. When you rent, improvements only increase value for your landlord. Ultimately, paying rent will only get you a roof over your head. There are virtually no benefits that paying rent offers beyond having a living space. Further, making mortgage payments on time helps build your equity and credit score.

 

Tax Deduction

Some people benefit from claiming deductions for mortgage interest and real estate taxes. Others find a standard deduction more valuable. Even if you exclude the tax benefit, the real cost of owning can still be less than renting.

 

Stability and Freedom

When you move into a home, it is something that is truly yours. You are free to decorate your environment as you please without worrying about restrictions from your landlord. By settling into a home, you will likely find yourself more involved in the community, whether that is through volunteering, participating in your home owners association, or simply establishing relationships with your neighbors. Renting is typically less stable than home-ownership and relationships with those around you tend to be avoided. Payments for a mortgage can be consistent with a fixed-rate mortgage, making the payment process easier.

 

So, with the cost of rent on the rise, finally taking that leap into home-ownership may be well within your means and could prove to be beneficial. Consult with a loan officer in your area today and we can answer any questions you may have!

If you are thinking about home-ownership, you may want to check out our blog on Inlanta’s Home Loan Roadmap.

 

OUR MISSION STATEMENT

Our mission is to be the home financing partner that you trust to serve your family, friends, and community. Through our family of dedicated mortgage professionals, our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty, and ethics is the foundation of all of our relationships.

ABOUT INLANTA MORTGAGE

Headquartered in Brookfield, Wisconsin, Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Freddie Mac and Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs.

Inlanta Mortgage was recently named a Top Workplace for a third time in 2015. Inlanta has also received the Platinum Million Dollar USDA Lender Award and has been recognized as a Top Mortgage Employer by National Mortgage Professional and a Top 100 Mortgage Banking Company and 100 Best Mortgage Companies to Work For by Mortgage Executive Magazine.

Inlanta Mortgage, Inc. NMLS #1016.

Myths About Refinancing

Refi-Myths-Debunked

Mortgage Rates Drop – Many Question Refinancing

Last week, Freddie Mac posted the results of its Primary Mortgage Market Survey® announcing that mortgage rates have dipped to their lowest point since June of 2013. That begs the question, “Should I refinance?”

There is a lot of false information about refinancing floating around out there. Here are a few refinancing myths debunked that will hopefully encourage you to call your licensed Inlanta Mortgage loan officer. Inlanta loan officers are trained to assess your situation and give you straight up advice about your home financing situation. Find a loan officer near you using our branch locator for a free loan review to determine your potential savings and benefits.

Refinancing Myths Debunked

  1. “I’ve read that the rate needs to be 1% or 2% lower than my current one.” – When average loan amounts were much lower, it took a much bigger drop in rates to achieve tangible savings. Today, even small rate differences can make a big impact. The best way to determine value is to simply divide your costs by your savings. This provides a “break-even” period, and if you know you’ll be using your loan past this point, the rest is pure benefit.
  2. “I haven’t yet reached the break-even point from my last refi.” – That may be okay. Refinancing again will require additional investment, but it could get you to an overall break-even point—and greater savings—more quickly.
  3. “I don’t want to add years back to my loan.” – One of the benefits of the current rate market, is it can provide the opportunity to lower the term of your loan, paying your house off sooner and with less interest cost. If lowering your term is not your preference, keep in mind the new loan term created when you refinance is only on paper. You determine the actual length of the loan by how much you pay. If lowering your interest rate saves you $100 per month, add that money to your new payment. You will reduce your balance more quickly and reach free and clear ownership faster than you would by keeping your current loan.
  4. “It’s too expensive. I’d rather save my money.” – Refinancing is all about saving money! The historically low interest rates that make refinancing such a good deal right now also make “saving” your money in the bank a lousy one. Banks are paying just fractions of a percent to hold your cash, but investing in a refinance could save you hundreds of dollars per month for a far greater yield on your cash.

Refinancing can have other benefits, too. A lower rate may mean not only a smaller payment but more paid toward principal each month, too. You may be able to free up cash for renovating your home, financing a college education, purchasing a vacation home or investing in property without adding to your monthly expenditures.

Find a licensed Inlanta Mortgage loan officer near you using our branch locator to help you decide if refinancing now makes sense for you.

Our Mission Statement

Our mission is to be the home financing partner that you trust to serve your family, friends and community. Through our family of dedicated mortgage professionals, our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty and ethics is the foundation of all of our relationships.

About Inlanta Mortgage

Last year, Inlanta Mortgage celebrated its 20th Anniversary. Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Freddie Mac and Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin NMLS #1016. Inlanta Mortgage was recently named a Top Mortgage Lender in 2013 as well as 2012 by Scotsman Guide. Inlanta was also recently named a Top Workplace in 2014 as well as in 2012. Inlanta was named one of the “Top 100 Mortgage Companies in America” in 2011, 2012 and 2013 and one of the 50 Best Companies to Work For by Mortgage Executive Magazine.

3 Common Mortgage Myths

Mortgage Myths

Mortgage Myths

Are pre-approvals and pre-qualifications the same thing? If you are pre-approved are you guaranteed to close your mortgage loan? Do all mortgage loans require a 20 percent down payment? In today’s blog post, we hope to debunk a mortgage myth or three and help you better understand the mortgage process.

Mortgage Myth No. 1

Pre-qualification and pre-approvals are the same thing. FALSE.

Pre-qualifications will give you an idea of what kind of loan you may qualify for and can typically be completed in minutes. This informal estimate may be just fine for those in the very early stages of the home buying process.

Pre-approvals are more involved and are a better indication of your ability to fully qualify for a mortgage loan. In order to get pre-approved, we will gather all the information we need to begin the loan process. This typically involves a credit check as well as income and asset verification. Read more about the pre-approval process in House Hunting? You Need a Pre-Approval Letter.

Mortgage Myth No. 2

You need a 20-percent down payment. FALSE.

There are a lot of options out there for home buyers, including Federal Housing Administration (FHA) loans that allow borrowers to put as low as 3.5-percent down. USDA loans and VA loans typically don’t require a down payment, but do have certain eligibility requirements.

While a lower down payment may help borrowers get into a new home sooner, mortgage insurance is typically required. Read more about mortgage insurance premiums (MIP) and private mortgage insurance (PMI) in What is Private Mortgage Insurance or PMI?

Mortgage Myth No. 3

Your mortgage pre-approval means that your mortgage is guaranteed. FALSE.

Too many borrowers make the mistake of making large purchases or applying for new credit while in the middle of the mortgage process.

If you have applied for a mortgage loan or intend to apply for a mortgage, do not under any circumstances apply for new credit. This means no new credit cards, credit card consolidations or auto financing. If you open a new account during the mortgage process, it will need to be verified by your lender. While you may think that your lender won’t know, lenders do a credit check prior to closing to ensure your account status hasn’t changed. Anything that changes will require additional verification. Your credit score could change because of your new financial situation, which could cause delays in your settlement or changes to your interest rate.

Read Mortgage Do’s & Don’ts to learn about ensuring a smooth loan process.

Contact Us or Apply Online

All of our loan officers are qualified to discuss your personal finances and recommend the best mortgage loan program for your specific needs. Find a loan officer near you using our branch locator, or apply online and we will forward your application to a qualified mortgage professional in your area.

About Inlanta Mortgage

Celebrating its 20th Anniversary, Inlanta Mortgage is a growing mortgage banking firm committed to quality mortgage lending, ethical operations and strong customer service.

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage has been named to the Scotsman Guide Top Mortgage Lenders 2012 list, Mortgage Technology’s Top Tech Savvy Lender List, is a Top 100 Mortgage Banking Companies in America in 2012 and among the Fastest Growing Milwaukee-Area Firms.