Adjustable-Rate Mortgages Wyomissing, PA

When shopping for mortgages in Wyomissing, PA, you may be overwhelmed by the number of options. Lenders have a wide variety of terms and rates, but deciding whether you would prefer a fixed-rate or adjustable-rate mortgage can simplify the process.

Bellco Federal Credit Union (FCU) is a member-owned, not-for-profit federal credit union. Since 1938, when we were known as the Bell Telephone Credit Union, we have provided unique financial products and services to individuals and small businesses in Berks County. As one of the best mortgage lenders in Berks County, PA, we are committed to helping your family build a secure financial future.

Fixed-Rate vs Adjustable-Rate

Fixed-rate mortgages have been the traditional choice of homebuyers for many decades. You and your lender agree to a length of time (or term), typically 15 or 30 years, and an interest rate. The interest rate remains the same for the entire term of the loan. Since the interest rate never changes, your mortgage payment will be the same every month.

Adjustable Rate Mortgages (ARMs) have an introductory interest rate that lasts for a specified time period and then adjusts up or down for the remaining time period. If, for example, you see the phrase “5/1 ARM,” it means that the mortgage will have a set interest rate for the first five years of the loan and then a new rate every year after that until the loan is repaid. 

Here are several factors to consider when deciding which type of mortgage is right for you.

How long do you plan to own your home?

ARMs typically have a lower initial interest rate than you might otherwise be able to get with a conventional fixed-rate mortgage. If your line of work requires you to move from place to place every few years, an ARM loan may help you save money during the period of time before the adjustment period kicks in.

Let’s say, for example, that you purchase your home with a 5/1 ARM. If you move and sell the home within five years, the mortgage will still be in its initial fixed-rate period and will not have adjusted yet. Selling the home (or refinancing the mortgage) before your payments start to adjust can be a good strategy.

How much down payment can you afford?

Most lenders require a 20% down payment in order to give you the lowest interest rate on a fixed-rate mortgage. If you don’t have enough cash on hand to make a large down payment, an ARM can be easier to qualify for and provides you with a low interest rate, at least for a few years. 

If you have the cash to make a 20% down payment, a fixed-rate mortgage is a safer, more conservative choice. You will have a good interest rate, you won’t have to worry about an approaching ARM adjustment period, and your mortgage payment will be the same from month-to-month no matter how long you stay in your home.

Bellco FCU’s locally-knowledgeable loan advisors will be happy to discuss your goals and help you establish an affordable fixed-rate or adjustable rate mortgage that meets the needs of your family.

Bellco FCU offers membership to people who live, work, worship, or attend school in Berks County, including immediate family members, such as your spouse, children, siblings and parents. Open a primary Member Savings account with as little as $5 and follow a few simple steps to become a member.

Get more information about adjustable rate mortgages and other home mortgage options in Wyomissing, PA, from Bellco FCU.