An Adjustable-Rate Mortgage (ARM) can be a good choice if you plan to stay in your home for a short time or if you want more manageable payments upfront. If you find you’ll be living in your home longer, or if your ARM adjusts to a rate that’s higher than current conventional mortgage rates, refinancing to a fixed-rate mortgage may make sense.
Example: The Smiths purchased a home for $200,000 with a 5/1 ARM as they originally intended to sell the property before the initial fixed-period ends. After 3 years, they decided to stay longer and refinanced to a 30-year fixed-rate mortgage.
|Loan Amount||Interest Rate||Monthly Principal and Interest (P&I) Payment||Principal Balance at 3 Years|
|Maximum rate at 1st payment||ARM 4.250%||$753|
|Refinance $139,131 to a 30-year fixed-rate||Fixed 3.750%||$615|
*Principal balance assumes that the borrower will pay all closing costs out of pocket.
All applications are subject to underwriting approval. Not all applicants will be approved. Fees and charges may apply. Terms, conditions & restrictions apply. Rate and term may vary based on individual loan characteristics. Rates are subject to change without notice. Not all applicants will be approved. Minimum credit score may apply. Documentation, acceptable properties, insurance, and underwriting is based on individual loan characteristics. Loans are secured by liens against real property. Waiving escrow may require a higher rate or additional fees. By refinancing a consumer’s loan, the total finance charges may be higher over the life of the loan. Call for further details.
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