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Adjustable Rate Mortgages - The PROS & CONS

Now that you know what an ARM is and how it works, you may be wondering what the advantages and disadvantages are. So let’s explore that issue.

Offering adjustable rates allows lenders to transfer part of the interest rate risk from themselves to the borrower. If you get a fixed rate mortgage and the interest rate then goes up, it costs the lender money. However, if you have an adjustable rate mortgage, as the interest rate goes up, so does your payment, thus compensating the lender. Adjustable rate mortgages are particularly useful when unpredictable interest rates make fixed rate loans hard to get.

One of the main advantages of an adjustable rate mortgage is that the initial interest rate is lower than that of a fixed rate mortgage. A lower rate means lower payments, which may help you qualify for a larger loan. This is an important detail if you expect your future earnings to rise. In this case, the ARM will allow you to qualify for a larger loan amount earlier rather than later.

However, this information should only be used with care. If you use an ARM to qualify for a larger loan amount than a fixed rate would allow you and the interest rate then rises drastically or your income doesn’t rise, you may not be able to afford the larger monthly payments, thus causing you to default on your loan.

A situation in which an adjustable rate mortgage makes sense would be if you are only going to keep the house for a short period of time. If you are only planning to own your house for only a few years, the risk of the interest rate rising goes down. This means that you will get a better rate with an ARM, making it a good choice. However, if you plan on staying in your home for a long period of time, a fixed rate may be a better option.

The lesson here is to have a plan. Know what your goals are in purchasing a home and plan for all eventualities. Do your research when shopping for an ARM and consider the worst-case scenario.

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HRW Realty Corp
5540 McNeely Drive
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Raleigh, NC 27612
919 783-1855
Email: team@hrwrealty.com

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Thank you Lisa!!! Was a pleasure being in your hands in renting and selling my unit. Thank you very very much for your thorough approach and professionalism. Hope we can do business once again. Martin
Lisa Holmes, You are a GREAT agent, I wish more were like you and I have been doing this job 19+ years and I can’t say that about many agents, but you, you are one of the great! Attentive, care and amazing follow up – can you teach all agents to be like you??? Heather Bradley, Paralegal The Coleman Law Firm, P.A.
I am just finishing a 3 year lease through HRW. It has been a wonderful experience. Over the last years I never had a problem or complaint. Maintenance requests were dealt with in a timely manner and questions were quickly answered. Lisa and Robert Holmes are professional and have been very accommodating in negotiating my departure date. I highly recommend HRW Realty! Cynthia W.
No Issues Here – I moved out of one of their rental units at the end of last year and never had any issues during my lease. I had a couple appliances break but they fixed those with new within a day or two. Pretty sure they contract with the original owners of the individual units for repair costs and whatnot so maybe these other reviews weren’t so lucky with their place’s owners. No idea. My place was close to downtown. I only moved because I got married and moved in with my husband. You can just mail your rent check each month, so no matter where you end up living in the area it’s pretty convenient. I barely went to the office after I initially leased, but when I did I got nothing but help. I usually stuck to email and got responses back that day. I’d definitely recommend HRW Realty! Prior Resident
This company is wonderful! – I rented from HRW last year and was beyond happy with the service and help they provided! When the property I was living in was turned over to another property management company i was so disappointed. I had already thought that the people at HRW were wonderful but after working with another company, I look back and appreciate them even more! They are always prompt in returning your calls and send people out to fix things literally asap, and if they say they're going to send someone tomorrow at 2, trust me, someone will be there tomorrow at 2. They're really great, they bent over backwards for me when I was a new tenant and they didn't even know me yet. I just really cant say enough great things about everyone there. I wish I were in the market to buy a home because they are the first people I would go to. I unfortunately had to move out of the property I was at because the company that took over was so horrible I couldn't stand it any longer and am now renting in an apartment complex. I couldn't go back to HRW to rent again only because the properties they had available were all too big for me at the time when I was looking (I'm single and don't have a lot of stuff, plus I work in the nonprofit/social services field so it's not like I can afford a whole lot more than I need). Anyway, I really can't say enough great things about HRW. I've worked in professional customer service before and I know how difficult it can be at times, but they never make you feel like your inconveniencing them, which really puts you as a tenant at ease. I never dreaded calling them, actually i looked forward to it sometimes because they're so nice I could chat on the phone with the receptionist for a while if she didn't have work to do! Anyone who has any further questions about them feel free to contact me because I really appreciated them and I think it's important to spread the word about a company that's doing a great job. Word of mouth is the best advertising they say! Prior Resident
While looking for land to build, Lisa researched and helped us negotiate the purchase of land in Chatham County. When we were ready to sell our home in Cary, we knew we’d be working with HRW Realty. Again, Lisa’s research was solid and thorough. She supplied a checklist of items that would help us sell our home faster and at the best price. Ever the perfectionist, Lisa took her own pictures, offered amazing advice in staging, recommended outside services and our home never looked better. Lisa was calm, professional and confident in her process at every step. We highly recommend Lisa Holmes and HRW Realty to assist with your real estate needs. Jean and John
It's never easy purchasing a home while still living in another state but Lisa Holmes helped us each step of the way. We wouldn't be in our beautiful home if it wasn't for Lisa. She helped us find the right mortgage lender and was there for us during each step of the process. Our sellers refused to pay for a $7000 repair which was revealed during the inspection and we were ready to walk away from purchasing the home. Lisa's knowledge, experience and negotiating skills in tough situations exceeded our expectations. And here we are in our new home in Wake Forest. Thanks Lisa! Gina and Tim
Thanks for your help. I really appreciate it. I am so happy with all the work you have done for me: i.e. Managing my Townhome, selling my Townhome, and selling my land.  Sheri M.
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