Why Many People Subscribe to the Austin 7/1 arm rate?
The Austin 7/1 arm rate came as a result of studies that were conducted to determine how long people stayed after buying or building a home. In the research, it was noted that most mortgage borrowers spend between 7 years and 13 years in the first home hence, the establishment of the Austin 7/1 arm rate. It is this statistic that also made a number of people shift from the 30 year fixed mortgage rate in Austin.
Defining the Austin 7/1 arm rate?
The Austin 7/1 arm rate is a fixed low rate charged on a borrower’s loan. The loan rate is charged for seven years after which it increase at the rate of 1% and based on the market conditions. The Austin 7/1 arm rate is determined by looking at the index rate, Margin, initial rate, payment cap, interest limits and adjustment time/ period.
The key thing when looking at your mortgage rate is the index and margin. If your index is at 4% and your interest is at 2%, this means you first mortgage rate after your adjustment period will be 6%.
Benefits of the Austin 7/1 arm rate
Low interest rates
There is one common thing about people who subscribe to the Austin 7/1 arm rate and Austin 15 year mortgage rates; they want to pay low rates. It’s difficult to calculate the margins if you can’t get over the monthly remissions required for the Austin 7/1 arm rate. But once you get over it and do the maths, you will realize that you will pay less interest rate generally. This is not similar to those with Austin 30 year mortgage rates. Austin 30 year mortgage rates are generally comfortable, but higher in general,
Additional Years to Refinance or Shift Homes
Austin 5/1 arm rate subscribers have only five years to pay their mortgage at a fixed rate. Afterwards the loan rate adjusts upwards. Austin 7/1 arm rate subscribers get an added two years of standard loan payment. This additional time can be used to refinance the mortgage. You can also sell your home if you don’t plan to keep it for long.
Lifetime Cap
An Austin 7/1 arm rate comes with a lifetime cap. This lifetime cap protects the borrower from unfavourable market conditions. Let us assume you are planning to sell your mortgage property and save yourself a cool $7000 to $8000 off your mortgage. This is nice, but sometimes it doesn’t happen. When it doesn’t happen you may be forced to stay at your current home and now pay a mortgage rate of 4% and 4.5% cap. This means that your loan cannot pay above the 8.5% rate. But better yet, you can switch to a fixed Mortgage.