An adjustable rate mortgage is a type of loan that features an interest rate which may adjust during the course of the loan, based on a market index. In contrast to a fixed rate mortgage, where the interest rate remains unchanged for the duration of the loan, the interest rate on an adjustable rate mortgage may rise or fall, according to changes in interest rates in the marketplace. The main reason to consider an adjustable rate mortgage over a fixed rate mortgage is that you could end up paying a lower monthly payment. This type of loan may start out with a low interest rate, but your interest rate could raise in the future. Knowing what to expect from an adjustable rate mortgage and which lender you should choose is crucial.
Adjustable Rate Mortgage Lenders- What to Pay Attention to
- Interest rates. Adjustable rate mortgage loans have a smaller interest rate at the beginning of the repayment period, but that interest rate will be adjusted over time. Depending on changes in the market and in the economy, the interest rate could go lower or higher, meaning your overall cost of the loan will either decrease or increase.
- Caps. While an adjustable rate can be a risky choice due to the fact that the interest rate can rise significantly, there is a way in which you can manage that risk. By adding restrictions, called “caps”, to how much the interest rate on your mortgage can adjust, you will limit the risk that your monthly payment will become a burden.
- Attention to detail. Mortgages have many details that must be taken into consideration by the lender before you should be asked to sign a contract. Overlooking even a small detail can be very costly to the borrower, so avoid adjustable mortgage lenders who try to rush you into signing anything before every little detail is analyzed.
- Customer service. A trustworthy lender will sit with you and tailor an adjustable rate mortgage that will fit your financial situation and your needs. He will also explain the course of action, what fees you will have to pay, and keep you informed once you have started the mortgage process.
Before choosing an adjustable rate lender, make sure that you have researched them thoroughly. You can be sure that they are going to research you before giving you a mortgage loan, so doing the same will ensure that you will be getting the best deal possible and save you a lot of trouble in the long run. Here is a list of the top 10 adjustable rate mortgage lenders that constantly strive to offer quality service to their customers:
Top 10 Adjustable Rate Mortgage Lenders
- Wells Fargo. The largest bank in the U.S. by market capitalization, the fourth largest by assets, and the second largest in mortgages, deposits, and debit cards, Wells Fargo has approximately 2,000 mortgage branches in the United States. One out of three home loans originates from Wells Fargo.
- U.S. Bank. Owned by parent company U.S. Bancorp, the fifth largest bank in the United States employs more than 63,000 people, and has over 15 million customers. U.S. Bank provides financial services to individuals, businesses, government institutions and nonprofit organizations.
- HSBC. British company HSBC started offering its financial services in the United States after acquiring the Republic National Bank of New York in 1999 for 10.3 billion dollars. HSBC started offering mortgage loans online or by the phone to the U.S. public in 2005.
- SunTrust Banks. One of the leading financial services holding companies in the United States, SunTrust has more than 1,600 branches and around 3,000 ATMs across the Southern states. The bank was formed by the merger of SunBanks, Inc. from Florida and the Trust Company of Georgia in 1985.
- TD Bank. Founded in 1852 in Portland, Maine, TD Bank is a U.S. bank that offers banking, mortgage and investment banking services. It currently serves the following states: Connecticut, New Jersey, Delaware, District of Columbia, New York, Florida, Rhode Island, Maine, Massachusetts, Maryland, Vermont, New Hampshire, North Carolina, Pennsylvania, South Carolina, Virginia, and Washington.
- First National Bank of Omaha. A subsidiary of First National of Nebraska, the biggest privately owned bank in the United States, First National Bank of Omaha and its 5,000 employees serve the following states: Illinois, Nebraska, Colorado, Iowa, Texas and Kansas.
- Zions Bank. Owned by Zions Bancorporation, Zions Bank owns 106 branches and has 2,700 employees in Utah and Idaho. Zions bank was founded in 1873 and was acquired by Keystone Insurance and Investment Company in 1960.
- Bank of the West. Founded in 1874, Bank of the West is a subsidiary of the French group BNP Paribas and it serves most states in the Midwest and Western U.S.
- Commerce Bank. The largest independent bank in the lower Midwest, Commerce Bank is a subsidiary of Commerce Bancshares, Inc. Commerce Bank offers financial services to businesses and individuals in Illinois, Missouri, Oklahoma, Kansas and Colorado.
- North American Savings Bank. With over 1 billion dollars in assets, North American Savings Bank offers retail financial services to customers in the United States since 1927. North American Savings Bank is one of the leading mortgage lenders in the country, with over 8 billion dollars in home loans since 2008.
Choosing between a fixed rate and an adjustable rate mortgage can be quite difficult, so discussing your concerns with a top mortgage lender is recommended. They will take all the factors, such as your financial situation and future plans, into consideration and come up with the best choice for you. An adjustable rate mortgage may look very tempting at first due to its low interest rate, but always remember that there is a chance that the interest rate will raise in the future.