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More Destin, FL Luxury Homes in ARMS

Adjustable Rate Mortgages (ARMS) are making a revival with buyers of luxury homes in Destin, FL thanks to rates lower than fixed-rate mortgages.

ARMS are a unique loan program that can be risky but perfect for the right buyers.  Typically they come with a fixed rate for about five years, then adjust up to a certain percent each year thereafter.  ARMS account for 30-40 percent of private jumbo loans at Bank of America, and closer to half at NASB Financial.

The average rate on a 5/1 ARM – where the rate adjusts annually after five years – is 2.82 percent.  The average rate on a 30-year fixed is 4.06 percent.  The ARM saves borrowers over $90,000 in interest on a $1.5 million loan.

Why the sudden increase in popularity?

With the announcement of a third run of quantitative easing and the Fed’s committment to purchase $40 billion of mortgage backed securities each month, it’s unlikely that rates will see a significant increase anytime soon.  As a result, affluent homebuyers with a high net worth feel there is limited risk with this particular loan program.  Even if rates did suddenly spike, these individuals have enough liquidity to quickly settle the remainder of the debt before they incur any problems.

If you would like to search luxury homes in Destin, FL, contact Kerry Veach.  Kerry is an experienced Realtor who can help you buy or sell Destin, FL real estate.  With over 1,000 closings and a full-time real estate team, it’s no wonder that 95% of Kerry’s business comes from referrals.




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