adjustable or fixed?


   With an adjustable you'll be able to:

  • Qualify for a larger loan

  • Minimize your payments

  • Overcome some credit issues

   But there is risk of rising rates and
   payments.

 

 

If you are willing to assume some interest rate risk, adjustables can provide the following potential benefits:
Savings potential: The introductory rates offered on adjustables can be 4%+ lower than that offered on the 30 year fixed. Also, even after the introductory rate expires, the rates on the most competitive adjustables have historically been 1%+ below that of the 30 year fixed rate loan. Thus, the adjustable could save you 1-3% of your loan balance vs. a 30 year fixed in year 1 with the potential for additional savings thereafter. Of course this is not risk free.
Qualify for a larger loan: Since the qualifying rates for adjustable are 1% or more below that of fixed rate loans, you can qualify for a higher loan amount. For a given level of income, this usually translates in to an increased loan of about 15% more than for a 30 year fixed. Also, unlike fixed rates, most adjustables are retained and serviced by lenders. Thus, the underwriting criteria are more flexible. In most cases, this means obtaining a larger loan amount and the opportunity to overcome various credit, income and/or property specific issues.
Take advantage of a decline in rates: Should rates decline, the frequent adjustments would enable you to save money. Rates may fall once the Federal Reserve is convinced the economy and inflation are cooling. The narrow spreads, which now exist between short and long term rates, have historically indicated that rates are more likely to fall rather than rise.

Many of our Adjustables offer…

  • No Point and/ or No Fees ( we may even pay your title and escrow services)

  • Preferred rates for down payments of =>30%

  • Preferred rates for excellent credit (click here to read about FICO Credit Score)

  • Ultra low Interest only and deferred interest payments

  • Low 3% and 5% down payments

    •

Click here for a free loan proposal on any of our No Point and / or No Cost Adjustables.
A fixed rate loan should be considered if one or more of the following best describes you:
You anticipate keeping your home 10+ years: The longer you keep your home, the greater the chance that rates will be higher than they are today.
You have a fixed level of income: If your income is not likely to increase over the years, any increase in rates and payments could be difficult.
You do not have sufficient assets to pay loan off: Ideally, if you had 100% of your loan balance in liquid assets, you could take on the risks and potential benefits of an adjustable. Thus, If rates were to increase substantially, you would have the ability to pay the loan off in full. Since cash reserves act as a buffer against rising rates, the lower your cash reserves, the more you should consider a fixed rate.

Many of our Fixed Rates offer….

  • No Point and/or No Fees ( we may even pay your title and escrow services)
  • Preferred rates for down payments of=>35%
  • Preferred rates for excellent credit (click here to read about FICO Credit Score)
  • Low 3% and 5% down payments

Click here for your free loan proposal on our Fixed Rates.

Interim Adjustables-- the best of both fixed and adjustables: These loans are fixed for a period of years and then automatically convert to an adjustable. These offer fixed rate terms for 3-10 years with rates that are .5%-1% below a 30 year fixed. At the end of the fixed rate term, these automatically convert to an adjustable. If you like the idea of fixed rate stability and are likely to sell your home in the next 3- 10 years, these may be appropriate for you. Many of our Interim Adjustables are offered on a no points and even no cost basis.