Conventional Adjustable Rate Mortgages (ARM)
A Conventional adjustable rate mortgage (ARM) also follows the guidelines established by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans and package them into securities and sell the securities to investors. Thus, Fannie Mae and Freddie Mac provide an on-going flow of funds for home loans that results in easily accessible loans for all Americans.
The Fannie Mae and Freddie Mac guidelines establish the maximum loan amount and the underwriting parameters. The maximum conventional loan amount is the same for both a fixed rate and adjustable rate mortgage. The current maximum conventional adjustable rate mortgage amount is $424,100.
A conventional ARM loan is usually a 30-year amortization, but has an interest rate that is locked for a period shorter than the length of the loan. The most popular conventional ARM loan rate mortgage has a rate that is fixed for a period ranging from 3 years to 5 years to 7 years, and even up to 10 years. Historically, the shorter amount of time that the rate is fixed, the lower the interest rate. After the fixed period is exhausted, the interest rate will adjust every 12 months based upon a margin and an index. The margin can vary between 2.25% and 2.75% and is added to either the LIBOR or Treasury index at the anniversary date each year in order to arrive at the interest rate for the next 12 months.
Learn More from Mortgage Solutions of St. Louis
If you’re first time home buyer, a conventional adjustable rate mortgage may be a great option, but conventional ARM loans can also be used for a primary residence, a second or vacation home and even an investment property. Contact us today to speak with one of our friendly experts who can help with your home buying experience.
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Our family could not fulfill our financial goals in Real Estate without Jimmy’s expertise. He is knowledgeable, thoughtful, helpful, expedient with his work. He was also very patient with our work when it came to customizing our home buying and refinancing needs. In the holiday season, we all have things to be thankful for, and a productive working relationship with Jimmy is at the top of our families list. I strongly recommend others to work with Jimmy for any Real Estate financing needs.
I recently refinanced my home with Mortgage Solutions of St St Louis. My past experiences with refinancing taught me that the process would be long, stressful and time consuming. My experience with Mortgage Solutions of St Louis was the exact opposite. They were friendly, fast and made it easy. I think the difference is working with a company that does this all the time, they understand how to get people thru the approval process because they know what they are doing. Other firms do it part time and don't have the expertise. I would highly recommend them to anyone, they are customer focused and driven to help the consumer, not just a bank.
Webster Groves, MO
Mortgage Solutions always takes great care of us. They understand the market, can time their deals to deliver the highest benefit to their clients and make the process smooth.
Keefe Group
I can't say enough great things about Mortgage Solutions. Both my original loan and refinance were smooth and required a minimal amount of hassle. They are great about getting back to you immediately if you have questions or concerns. The best part is that they refinance for free, so we were able to switch from a 30 year to a 20 year at no cost to us and keep essentially the same payments.
St Genevieve School