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Adjustable-Rate Mortgages in Virginia

Are you a Virginia homeowner who wants to pay off your mortgage quickly? If so, an ARM loan may be a perfect solution for you. From downtown condos to remote mountain cabins, Dash Home Loans is here to help you finance the home of your dreams.

Borrowers in Virginia looking to pay off their full loan amount within a specific timeframe often secure an adjustable-rate mortgage, or “ARM” for short. ARMs are mortgages with interest rates that change throughout the loan’s lifetime.

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What Is an Adjustable-Rate Mortgage?

Most prospective homebuyers understand the concept of interest. However, many may not know the distinction between fixed- and adjustable-rate home loans.

With a fixed-rate mortgage in Virginia, your interest rate is static until you pay off your mortgage — whether that takes 15 years or 30.

With an ARM, you’ll begin with a very enticing “teaser” rate that remains fixed for a predetermined period of time. After this initial period ends, your APR will adjust on a yearly or even monthly basis.

Andy Borter, Dash Home Loans
Not sure if you qualify? Contact us today to talk with one of our friendly Mortgage Coaches.

Understanding Virginia Adjustable-Rate Mortgages

ARMs go by many names, including “floating mortgages” and “variable-rate mortgages.” This jargon is good to know before you contact a lender in Virginia.

Below, you’ll find more terms that will help you speak the language of mortgage financing.

  • Index: An index is a benchmark interest rate that changes based on market conditions.
  • Margin: The ARM margin is the number of percentage points added to the index after the initial rate period ends.
  • Initial and Periodic Caps: The initial adjustment cap determines how much your interest rate can increase or decrease the first time it adjusts. In comparison, periodic caps determine how much interest rates can shift during an adjustment interval. Both initial and periodic caps protect homeowners from soaring interest rates.
  • Lifetime Cap: The lifetime cap is the maximum interest rate a homeowner can expect to pay on their ARM loan.

ARMs are expressed using two numbers. The first number indicates the length of your teaser period. The second indicates how often the rate will adjust after the fixed-rate period.

For example, with a 5/6 ARM, you can expect a fixed rate for five years. Then, your APR will adjust every six months.

Cap structures are also denoted using numbers.

For instance, let’s say you have a 5/1 ARM with a 2/2/5 cap structure. This means that your APR can increase by a maximum of 2% (the first “2”) after the teaser period. In the years to come, your APR can increase by a maximum of 2% (the second “2”) but never more than 5% (the last number).

Adjustable-Rate Mortgage Requirements for Virginia Borrowers

Intrigued by the teaser APR? If so, an ARM could be for you. But before you sign on the dotted line, check the eligibility requirements.

Requirements vary from lender to lender, but most look for:

  • A credit score of 620 or higher. However, borrowers with less-than-amazing credit may still qualify.
  • A down payment of at least 5%1. You may be eligible to put less down, depending on your lender. But just keep in mind that if your down payment is less than 20%, you’ll need to pay private mortgage insurance.
  • A debt-to-income ratio under 45%. To determine your debt-to-income ratio, add up your monthly debt payments and divide them by your gross monthly income.

If you have any questions about these requirements, Dash Home Loans is here to make home financing easy.

Contact us today and we’ll put you in touch with a Mortgage Coach who can guide you through the prequalification2 process.

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Pros & Cons of Adjustable-Rate Mortgages

Why do Virginia homeowners opt for ARMs? Because they can save money during the initial fixed-rate period when their APR is super low. This is perfect for a homeowner who wants to pay off their loan early or sell before their interest rate adjusts.

Of course, ARMs have a darker side. Even with caps, your interest rate can soar which, in return, increases your monthly loan payment.

If your budget can’t tolerate unpredictability, you risk defaulting on your mortgage. For this reason, most homeowners opt for traditional, 30-year fixed mortgages.

ARM vs Fixed-Rate Mortgage: Which Is Right for You?

It’s not always clear whether a homeowner should opt for a fixed- or variable-rate mortgage. Luckily, when you work with Dash Home Loans, we’ll connect you with a Mortgage Coach who can help you weigh the advantages of each.

During these conversations, they’ll likely ask you:

  • How long do you plan on staying in the home? If this is your first home, an ARM could be an excellent choice. Since your mortgage will be lower for the first three to five years, you can save up for your forever home.
  • What’s the interest environment like? If the rates are sky-high, an ARM makes sense because you won’t be stuck with an astronomical APR. But when rates are low, you’ll want to opt for a fixed-rate mortgage.
  • Could you afford your mortgage if interest rates rise? ARMs can be unpredictable. Your monthly budget needs to account for this, or you risk defaulting on your home loan.

Do you still have questions about ARM loans in Virginia? Contact Dash Home Loans online or give us a call at 757-280-1994 today!

Work With Dash To Secure an ARM Loan in Virginia

The average mortgage lender in Virginia makes getting approved for home financing downright confusing. They speak in legalese, expect you to wade through the paperwork alone, and rarely bother to return your phone calls.

At Dash Home Loans, we think you deserve better. That’s why we simplified the lending process by nixing inefficient loan processors and limiting unnecessary paperwork. The result? A streamlined experience where you can get approved for an ARM before you can say “home sweet home.”

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Apply for an Adjustable-Rate Mortgage With Dash Today

Financing your dream home can be nerve-wracking. But it doesn’t have to be. Contact us today to learn how easy our Virginia home financing process is.

Ready to get started? Awesome! Click ‘Apply now.’

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Virginia Adjustable-Rate Mortgage FAQs

Are ARM interest rates lower?

Yes, but only at first. Borrowers benefit from a “teaser” rate for a predetermined period of time. After this period ends, the APR adjusts — typically increasing.

Are ARM loans too risky?

Not necessarily. If you hope to sell in the near future or anticipate a salary increase, a Virginia ARM loan may be right for you.  

Do I qualify for an ARM?

Generally speaking, ARM loans are easier to qualify for than conventional, fixed-rate loans. Even borrowers with less-than-amazing credit (think: as low as 500) may qualify.

Can the interest rate on my ARM decrease?

Maybe. Depending on market conditions, your APR may drop. But in most cases, interest rates increase after each adjustment period.