Buy big with a jumbo ARM that starts at 2.625%
Home Loans Today is offering one of late autumn's best deals on 5-year, adjustable-rate jumbo mortgages in 43 states.
It's charging an introductory rate of just 2.625% with no points and no fees on a 5/1 jumbo ARM with a 30-day rate lock. That's a 2.625% APR.
Your principal and interest payments for the first five years of that loan would be just $402 per month for every $100,000 borrowed under the introductory rate.
You can use our adjustable-rate mortgage calculator to determine the monthly payment for the exact amount you want to borrow with this loan.
It will also provide a month-by-month amortization schedule that shows how much you've reduced your debt and how much you still owe if you want to pay off the loan.
There's a chance you'll find lenders offering jumbo 5/1 ARMs with lower rates, but it's important to check their interest rate caps before you sign up.
Rates on some of these loans can jump up by as much as five percentage points when they reset the first time.
But this deal from Home Loans Today won't do that. The interest rate caps are 2/2/5.
That means that your interest rate can't go up more than:
- 2 percentage points at the first adjustment in five years.
- 2 percentage points each year after that.
- A total of more than 5 percentage points over the life of the loan.
Although mortgage rates have defied all predictions and declined so far this year, it's a pretty safe bet that rates will move higher, perhaps substantially higher, when this loan first adjusts in five years.
That means your rate could hit 4.625% at the first adjustment, 6.625% at the second adjustment and max out at 7.625%.
Like most adjustable-rate loans, this option is best for borrowers planning to sell, or at least refinance, before the first adjustment, depending on where rates are at that time. This loan from Home Loans Today might allow you to wait until the second adjustment due to the low intro rate and modest rate cap adjustments.
But it's important to make sure you can still afford the monthly payments if you're stuck with this loan for more than five years.
At 7.625%, your monthly principal and interest payments for this loan would jump up to $708 per month for every $100,000 borrowed, or about $1,416 per month on a $200,000 loan.
And don't forget to factor insurance, property taxes and association fees into the payment, which can really bump up your monthly check to the bank.
Home Loans Today is a division of FBC Mortgage LLC and is headquartered in Orlando, Florida. It enjoys an A+ rating from the Better Business Bureau.
This loan is available in all states except Alaska, Delaware, Hawaii, Idaho, Montana, Nevada and New York. You also won't find it in Washington, D.C.
To qualify for this loan, you'll need:
- A credit score of 740 or higher.
- A down payment of 20% or more if you're buying a home.
- At least 20% equity in your home if you're refinancing.
- To take out a loan from $417,000 up to $2.5 million.
- An escrow account for property taxes and insurance.
Home Loans Today notes that you can waive the escrow requirement for a fee, which is somewhere around $500.
Keep in mind, you don’t want to drain your savings and take on mortgage payments that you are struggling to make every month. Here's how to find the price range that's right for you.