Let's just take a second and compare these 2 products.
We start with the attractive low interest rate of Prime for 3 years. Next, consider the change in ARM pricing over the past 6 months and the likelihood of this continuing. Why would you want to lock in a customer to a 5 year ARM when there is a downward trend in ARM rates? Instead, offer them a shorter ARM term - say, 3 years - which would allow them to renew into another ARM sooner (and at better pricing). The financial benefit for your customer could be huge. A hypothetical example follows:
Mortgage amount $300,000, 25 year amortization. Assume Prime is constant
Current 5 year ARM Rate: Prime + .10%. Current 3 year ARM Rate: Prime. Hypothetical ARM Rate 3 years from now: Prime - .50%
- Taking a 5 year term now, the customer would pay $32,438 in interest over the 5 years.
- Taking a 3 year term now, the customer would pay $19,259 in interest over the 3 years. Plus, they would pay an additional $9,150 for the next two years, for a total of $28,409. That’s a savings of $4,029 or 12%.
Here are a few of my favorite past articles from my Lethbridge real estate and mortgage blog you might have missed or wish to recommend them to a friend.
Lethbridge Real Estate Bargains - YES, there are still good deals to be had in Lethbridge
Lethbridge Basement Suites - Advice for every landlord
Lethbridge Condos - Condo living is great for student but also for seniors!
WANTED: Lethbridge Single Women: - Single women are huge in Lethbridge
Common Financial Problems - Avoid these financial mistakes
Get Your Credit Score UP - Invaluable insight into your credit score for Lethbridge residents
Lethbridge Manufactured Homes - Some great deals on manufactured homes in Lethbridge
What is wrong with MLS - Is your info being abused? Does it happen in Lethbridge?
Lethbridge Rental Property - Thinking about buying or selling rental property?
Robert May is a Realtor, as well as the broker and owner of Rainbow Realty of Lethbridge Alberta . He is also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta. He has been in the Lethbridge real estate industry since 1993 and offers full Lethbridge MLS real estate services to Lethbridge and surrounding area, as well as Lethbridge mortgage financing, mortgage refinancing , preapprovals, and Lethbridge loans financing to Lethbridge and Southern Alberta. He can be found online at this link: mortgage broker Lethbridge
Let me share my 16+ years experience in the local Lethbridge real estate and financing market with you! It is the first step towards making a profitable real estate decision.
