New York Offers Protection ARM Mortgage

\r\nAdjustable rate mortgages (ARMs) are receiving a bad reputation in the current mortgage market. As rates stay increasingly high, homeowners with adjustable mortgages are starting to feel the pinch of higher monthly payments. In response, New York Mortgage Company is now offering a “Homeowner Protection ARM” that has a 10-year cap of 6.99%, but still allows the rate to drop if the national index allows. The loan also keeps an ARM from going into negative amortization, since the payments become amortized after the 10-year period.\r\n

If a homeowner has a typical ARM, with a yearly cap of 2%, their payment could double in less than five years. Though this is not typical, some loans are now exceeding 7% on an ARM; this is the situation that New York Mortgage is circumventing. If the market strengthens, and the index drops, then borrowers can still experience a decrease in their rate as if they had a typical ARM. The Homeowner Protection also allows borrowers to pay interest only payments during the first ten years.\r\n