ARMs are back

I know the title may throw some people off, but it’s true, they are back in the game. First, the rates are very attractive, they are in the low to mid 4’s with Zero points. They also are starting to offer them with the interest only option. I believe a lot of lenders filled their portfolios with fixed rate mortgages over the last year and they are looking to diversified it by offering super low ARM rates. I do not like when people make bold statements, because I believe that each borrower is in a unique situation. I don’t agree when people say ARM stink or IO is horrible. There are a lot of people that used those products to help them get into their dream home. Do not misinterpret my comments, because I do not condone brokers who get borrowers into ARMs or IO products, without telling them. I think it is a good sign that banks are offering ARMs and hopefully they will keep expanding their product line, and offer more options to QUALIFIED  borrowers. With rates improving recently, I hope we see a pick up in applications and contracts. The great thing with these rates is, that you are qualified on the payment. That means if you are getting a 4.375 5 yr ARM, as oppose to a 5.25% 30 yr fix, you may be able to afford a little bigger home or qualify for the same home much easier, since your debt ratios will be lower. Please be aware, if you go with the IO option, you will need to qualify on the principal and interest payment, not the IO payment.

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