Adjustable rate mortgages (ARMs) are becoming more attractive as home prices rise and fixed interest rates increase.
Buyers can now look to save money with an adjustable rate home loan, as the purchase landscape is now starting to change a bit. These types of mortgage will continue to become more attractive with tighter inventories and monetary policy.
Fixed Rates Are On The Move
The mortgage world has been enjoying the benefits of low interest rates for quite some time. As rates are expected to rise in the immediate future, it is important for realtors and lenders to be knowledgeable about the products available for our customers that will still enable them to get into a home they love.
ARMS Can Open Doors
As rates climb, the adjustable rate mortgage is more important than ever. Often this product is misunderstood, so knowing exactly how ARMS work, and when they can actually benefit your client, is important. The right ARM can actually increase the buyers qualified amount. Lower rate ARMS often allow buyers to qualify for a bigger loan.
Realtors should choose lenders that are able to articulate the benefits of different products to their clients. If clients are educated about their purchasing power, they have a better chance of finding a home mortgage that helps them to achieve their goals.
Educating Your Buyer Increases Their Purchasing Power
Because ARMS work differently than a fixed rate loan, realtors and lenders should work together to help buyers navigate the benefits that come with an ARM’s low interest rate. The borrower must also be educated as to what happens to the rate as the loan matures. Keep in mind that in a rising rate environment, an ARM can be a very smart move. If your buyer hits the cap and the rate continues to climb, they are in the advantage.
Let’s Talk
If you are interested, please do reach out to talk in further detail about the mortgage products and how to expand your market base. I look forward to partnering with agents ready to take on the challenge of the change in interest rates, by offering products tailored to today’s economy.
The views expressed are my own and do not necessarily reflect those of American Financial Network, Inc.
