Fixed vs. ARM Made Easier
RPM recently added two jumbo ARM programs aimed at meeting the needs of our clients with higher loan amounts. Both our 5/5 ARM and 15/15 ARM strive to offer lower rates than their fixed rate counterparts while providing greater rate stability than a traditional ARM that adjusts annually after the initial fixed rate period.
The 5/5 ARM decreases the number of rate adjustments after the initial, 5-year fixed period. Instead of commencing annual or semi-annual adjustments, our 5/5 will convert only once per five years. And given its conservative cap structure, it’s sort of like obtaining a 10 year blended rate of no greater than the average of the start rate and the first adjustment max rate. Impressive!
The 15/15 ARM is entirely unique and offers perhaps the greatest stability of any ARM loan on the market. With only a single adjustment at year 15, this program can be seen as a great alternative to a 30 year fixed rate loan. We’re working to take the stress out of the Fixed vs. ARM decision. Let us know how we can help today.
Inside Your Interest Rate
When comparison shopping for the best home loan rate, have you ever wondered what factors into the lender’s pricing? Limiting our conversation to conforming loans, here’s an idea of some of the components that go into RPM’s pricing before we put our best foot forward to our clients.
First, pricing of the base security, also known as a mortgage-backed security or MBS. Imagine this as the crude oil that becomes gasoline. Next, there are G-fees that the government-sponsored entities charge to fund insurance pools against future loan losses. Then a complex set of buy-ups, buy-downs and interest float are used to smooth variances in future market prices, as loans locked on any given day will be closed at some point in the future. Finally, the value of the loan’s servicing is factored into the final quote.
When shopping for the best rate, know that there’s more beneath the surface than just lender profit. In fact, it’s a complex financial world. We are uniquely qualified to help you understand and act upon it.
Do Look Now! Rates at 12-Month Lows
The interest rate market never sleeps and it’s always our responsibility to assure that our clients’ financial opportunities don’t either. As we head into summer, rates are trending favorably and it might be worth your effort to make sure your current mortgage is the best it can be. In fact, many loan programs are at their lowest rate levels in the last twelve months. Why is this?
Instability in the Ukraine. When worldwide money managers get spooked, money flows to the safest place. And that safest place remains the US bond market.
Uncertain financial outlooks, both here and abroad. The Eurozone is again reminded it must stave off deflation while here in the US, growth must resume at a more robust clip. Both of these are easier said than done.
A yearly financial check-in is always a good idea, but with rates at 12-month lows on many programs, the timing could not be better. To find an RPM loan advisor near you, visit www.rpm-mtg.com/Agents.