Find out if Adjustable Rate Mortgages (ARMs) is the right loan for you
What kind of property do you have?
Adjustable Rate Mortgages(ARMs)
Are 30-years home loans that have interest rates and payments that change periodically (i.e. monthly, semi-annually or annually).
Adjustable-rate mortgages have low starting interest rates and payments, usually lower than current fixed rate loans, and then adjust based upon the movement of the underlying interest rate index.
A “conventional” adjustable-rate mortgage means any commonly available adjustable-rate mortgage that is not issued or guaranteed by the federal government.
Home Renovation projects can be financed and provide a great return on your investment. Not only you could be adding equity to your home but you will have many options to remodel your home. Whether it is adujustable rate mortgages, fixed rate mortgages , cash outs or personal loans. Check the appropriate home remodel loans for your situation and let Kukun match you with the right loan and right lender.
Pros
- Initial payments are typically lower than fixed rate mortgage thus making payments initially more affordable.
- If borrower expects to keep loan for only 3-5 years, or if the general interest rate market is expected to decline over the short-term, an adjustable-rate mortgage may be less expensive than a fixed rate mortgage.
- Periodic rate adjustments and maximum interest rate are capped.
- Loan pays off in full by the end of the term – no balloon payment at end.
- Loans are readily available from many sources in the market (i.e. Banks, Mortgage Companies, Savings & Loans, Credit Unions).
Cons
- Monthly payments will change (increase) making it more challenging to plan and budget monthly expenses.
- Interest rate and payments will change periodically, and could rise substantially May exceed payment level of a fixed rate mortgage.
- Require good borrower qualifications – good credit, steady income and larger down payment/ more equity.
- Qualification is based upon current “fully adjusted rate” not starting rate.
- Requires full principal and interest payment each month.
- Requires larger equity percentage if borrower want to access equity via a Cash-out Refinance -limited to 80% of the value of the property less existing liens.
- Requires full loan application, borrower documentation and appraisal, and may take 30-45 days to obtain funds.
- Up front closing cost and fees are higher than similar government loans.
- Can not be used on properties currently under construction.
Compare loans
Are you ready to take on that home remodelling project? Apply for a home improvement loan here.
Kukun partnered with few lenders to make the process hassle free.
Interest Rate
Adjustable - will
change periodically
Fixed – will not change
Monthly Payments
Payment changes when interest
rates change. Monthly interest-only
payments during draw
Fixed for life of loan Full
principal and interest
payments monthly
Term (length of loan)
Available terms between 10
years and 30 years
Available terms between
2 years and 7 years
Min & Max Loan Amount
$5,000 to $500,000
$2,500 to $100,000
Borrower Qualifications
Requires good credit, good
income and low debt-to-income
ratios
Requires excellent
credit, good income and
low debt-to-income
ratios
Closing Costs and Fees
Lower cost and fees than
conventional and FHA
loans. Depending on LTV, may only
require limited appraisal.
May have balloon payments and
annual maintenance fees
No fees or very low fees.
No appraisal needed. May
have early termination
fee in first 12 months
Application, Timeframe and Availability
Limited application of 30 days or less.
Available through most banks
and credit unions
Short online application of
3–5 days. Limited
sources
Interested in starting your remodeling project?
