Articles Tagged With: FHA ARM

February 22, 2024

Before You Apply For An Adjustable-Rate Mortgage

Are you worried about FHA loan interest rates? If you have decided to explore your home loan options with an FHA adjustable rate mortgage, here are some important details to know while still planning and saving up for the loan. FHA ARM Loans Differ From Conventional ARM Loans An FHAS adjustable-rate mortgage isn’t necessarily the same as a conventional equivalent. Your conventional lender’s occupancy guidelines will vary. Does yours have a requirement that the property securing the ARM loan serves as your home address? FHA ARM loans definitely require this as a condition of loan approval. Occupancy is key in that at least one borrower obligated on the FHA loan must live in the home being refinanced or purchased with an ARM. FHA loan rules on occupancy extend to nearly | more...

June 9, 2023

Should You Apply For An FHA Adjustable-Rate Mortgage?

By Joe Wallace

Borrowers considering their FHA mortgage loan options might wonder about an FHA Adjustable Rate Mortgage or FHA ARM loan option instead of an FHA fixed-rate home loan. It is a great idea to compare the features of both types of loan side-by-side to see which might make sense for you. The motivation to do this now has much to do with the interest rate environment we are still dealing with in 2023–in spite of hopes of improvement as the summer wears on. Why would an FHA ARM loan make more sense for some borrowers? Because an ARM offers a lower introductory or teaser interest rate. You may have the option to keep that rate for a full year or as long as ten years. Much will depend on the type | more...

June 1, 2023

Buying Your First Home With An FHA Mortgage

By Joe Wallace

If you’re thinking about buying your very first home and you want to save money on your down payment, an FHA mortgage is an option to consider because of the minimum 3.5% down payment. FHA loans have more forgiving credit requirements than some conventional loans, and the interest rates are traditionally lower than conventional mortgages. Perks of an FHA Mortgage: Pay Off Your Home Early Without Penalty The lender cannot legally charge a penalty for an early payoff of your FHA loan. You can pay extra on your mortgage, make extra payments, refinance the loan, or sell the property to pay it off earlier than scheduled. FHA Loan FICO Score Requirements in 2023 FHA minimum FICO score requirements say you must have a FICO score of 580 or better to | more...

February 15, 2023

FHA Fixed-Rate Mortgages Versus Adjustable Rate Mortgages

By Joe Wallace

What’s the difference between a fixed-rate mortgage and an adjustable-rate home loan? In 2023, you may find advantages in both types thanks to inflation and a recovering housing market. FHA single-family home loans come in a variety of types; both fixed-rate loans and those with adjustable rates. The rules for these loans, commonly referred to as FHA ARM loans, are spelled out in HUD 4000.1, the FHA Lender’s Handbook. Fixed rate home loans backed by the FHA are essentially what their name implies; a mortgage with a rate negotiated between the borrower and lender that does not change for the entire loan term. Borrowers who later want to apply for a lower rate can apply for FHA refinancing, including options such as the FHA Streamline Refinance loan program for FHA-to-FHA | more...

October 7, 2022

FHA ARM Loans

By Joe Wallace

There are many types of different FHA loan products. You can apply for new purchase home loans, refinance loans, and even Home Equity Conversion Mortgage loans (HECM). But even with this variety of options to choose from, did you know you can apply for purchase or refinance loans guaranteed by the FHA that have adjustable interest rates? It’s true–the FHA Single-Family Home Loan program offers both fixed-rate mortgages and adjustable rate home loans. The FHA official site has an entire page dedicated to Adjustable Rate Mortgages (also known as ARM loans). Here’s how the FHA/HUD official site defines the ARM Loan: “An ARM is an Adjustable Rate Mortgage. Unlike fixed-rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on | more...

June 15, 2022

FHA ARM Loans: Good Or Bad Idea?

By Joe Wallace

Why do people choose FHA adjustable-rate mortgages or choose to refinance with one? There are several reasons including the need to get into a lower rate upfront, as part of an overall strategy for buying and selling the home, or to take advantage of changing interest rates. ARM Loan Basics FHA Adjustable Rate Mortgages feature an introductory rate, and that rate expires after a set amount of time, typically one year. The introductory rate can also be set between three and 10 years. After that time period, the rate adjustments begin. Borrowers do better with ARM loans when they have a strategy for dealing with the rate adjustment periods. Do you plan to sell or refinance before the introductory or initial ARM loan rate expires? That plan works better for | more...

June 6, 2022

FHA ARM Loan Options To Consider

By Joe Wallace

An ARM loan, also known as an adjustable-rate mortgage, allows you to apply for a loan with an initial rate that will increase after the introductory period is over. The lower initial rate is a benefit for some borrowers, but it pays to have a plan on how to handle this type of loan in advance–do you really plan to pay on an ARM for the full term of the mortgage? Or do you want to sell or refinance instead? FHA loan options include ARM loans which may have a one-year intro rate, but you could apply for a three-year, five-year, seven-year, or even 10-year ARM loan. That means that the introductory rate won’t change for that initial period (three years up to 10 years) and then the loan is | more...

May 27, 2022

Can An FHA Loan Be An ARM?

By Bruce Reichstein

There are many choices to make when you want to buy a home. One of those choices is deciding whether a fixed-rate or adjustable-rate mortgage is right for you. FHA home loans come with an adjustable-rate mortgage option that features an introductory rate followed by an adjustment period that may vary depending on what you and the lender agree upon. When you choose an adjustable-rate mortgage, also known as an ARM loan, the introductory rate is typically more competitive than the fixed-rate FHA option. When using an ARM loan, some borrowers have a plan to sell or refinance before the first adjustment or soon thereafter. ARM loans are best for those who have a plan to deal with those adjustments. What follows are the FHA loan rules for FHA ARM loans, | more...

September 9, 2021

Do You Have An FHA Adjustable Rate Mortgage?

By Bruce Reichstein

Do you have an FHA adjustable-rate mortgage, also known as an FHA ARM loan? Is your introductory rate about to expire? It may be a very good idea to explore your refinance options to avoid the higher interest rate. Borrowers with adjustable-rate home loans rightfully get a bit nervous when the end of their introductory interest rate period, also known as a “teaser rate” period is about to and the first adjustment to the ARM loan’s interest rate becomes due. Borrowers can negotiate an introductory rate that lasts as little as one year and as many as 10 years with the lender, but eventually, that initial rate will end and the first adjustment will come due. If you have an FHA ARM loan you may be eligible for either a | more...

Rent Or Buy? Arguments For Purchasing A Home With An FHA Mortgage

September 17, 2020

Does FHA Offer Adjustable Rate Mortgages?

By Bruce Reichstein

Does FHA offer adjustable rate mortgages? When you shop around for a participating FHA lender, be sure to ask about this type of FHA loan, sometimes known as an FHA ARM. Not all participating lenders may offer an FHA adjustable rate mortgage, but for those working with a lender that does, it is important to know some basics about the mortgage and how FHA loan rules govern the adjustments in the interest rates. Borrowers who apply for an FHA ARM loan must sign a disclosure statement that outlines the terms and conditions of the mortgage. The rules that govern FHA ARM loans are found in HUD 4000.1, and those rules begin with a definition of what the FHA considers to be an ARM loan. “An Adjustable Rate Mortgage (ARM) refers | more...