Learn About Adjustable Rate Mortgages
February 23, 2024
If you are concerned about mortgage loan interest rates and decide to explore your options with an FHA adjustable rate mortgage, there are some details to know about these loans before you start.
FHA ARM Loans Are Different than Their Conventional Equivalents
An adjustable-rate mortgage offered by a conventional lender may or may not have a requirement that the property securing the ARM loan serves as your home address. FHA ARM loans definitely DO require this.
You can only be approved for an FHA ARM loan under the single-family home loan program if you or someone obligated on the mortgage plan to live in the home being refinanced or purchased with an ARM.
Down Payments Are Required for FHA Purchase Loans
It does not matter if your FHA mortgage is a fixed-rate loan or an ARM. You are still required to make a minimum down payment of 3.5%.
FHA ARM Loans Require an Appraisal
An FHA ARM loan requires an appraisal whether you buy or refinance a home with one. The only FHA loan that will not require an appraisal in the same way is the FHA 203(k) rehabilitation mortgage.
Those loans also require the home to be reviewed to ensure it meets FHA loan standards, but only after the renovations the loan has paid for are complete. An FHA ARM to purchase will require the same appraisal process as a fixed-rate mortgage.
FHA ARM Loans Are Subject to FHA Loan Limits
The same rules apply to ARM loans as for FHA fixed-rate mortgages. If you need an FHA mortgage that exceeds the loan limit for that county, you may need to apply for a jumbo loan.
FHA Mortgage Insurance Is Required for ARM Loans
An FHA ARM may differ from fixed-rate loans in terms of the interest rate and how that rate is adjusted over time, but the same mortgage insurance requirement, including the payment of an up-front mortgage insurance premium will apply.
FHA ARM Loans May Differ from Conventional ARMS
The most important difference between FHA ARM loans and conventional ARMs is how and when the interest rate is adjusted. Ask a participating lender to compare the FHA and conventional ARM loan options for you side-by-side and see which terms and conditions are the most favorable to you, as a borrower. You will be glad you did.
------------------------------
RELATED VIDEOS:
The ARM is an FHA Adjustable Rate Mortgage
A Few Tips About Your Fixed Rate Mortgage
Monthly Payments Establish Good Credit
FHA ARM Loans Are Different than Their Conventional Equivalents
An adjustable-rate mortgage offered by a conventional lender may or may not have a requirement that the property securing the ARM loan serves as your home address. FHA ARM loans definitely DO require this.
You can only be approved for an FHA ARM loan under the single-family home loan program if you or someone obligated on the mortgage plan to live in the home being refinanced or purchased with an ARM.
Down Payments Are Required for FHA Purchase Loans
It does not matter if your FHA mortgage is a fixed-rate loan or an ARM. You are still required to make a minimum down payment of 3.5%.
FHA ARM Loans Require an Appraisal
An FHA ARM loan requires an appraisal whether you buy or refinance a home with one. The only FHA loan that will not require an appraisal in the same way is the FHA 203(k) rehabilitation mortgage.
Those loans also require the home to be reviewed to ensure it meets FHA loan standards, but only after the renovations the loan has paid for are complete. An FHA ARM to purchase will require the same appraisal process as a fixed-rate mortgage.
FHA ARM Loans Are Subject to FHA Loan Limits
The same rules apply to ARM loans as for FHA fixed-rate mortgages. If you need an FHA mortgage that exceeds the loan limit for that county, you may need to apply for a jumbo loan.
FHA Mortgage Insurance Is Required for ARM Loans
An FHA ARM may differ from fixed-rate loans in terms of the interest rate and how that rate is adjusted over time, but the same mortgage insurance requirement, including the payment of an up-front mortgage insurance premium will apply.
FHA ARM Loans May Differ from Conventional ARMS
The most important difference between FHA ARM loans and conventional ARMs is how and when the interest rate is adjusted. Ask a participating lender to compare the FHA and conventional ARM loan options for you side-by-side and see which terms and conditions are the most favorable to you, as a borrower. You will be glad you did.
------------------------------
RELATED VIDEOS:
The ARM is an FHA Adjustable Rate Mortgage
A Few Tips About Your Fixed Rate Mortgage
Monthly Payments Establish Good Credit
Do you know what's on your credit report?
Learn what your score means.
