ATTAIN THE AMERICAN DREAM IN TODAY’S HOUSING MARKET

Spring is here, and with it, comes homebuying season! Yet these days, the prospect of homeownership can seem daunting. Especially in Southern California, where the median home price for an existing single-family home was $738,250 in January.

With prices and interest rates at their highest in nearly 20 years, for many, the 20% down payment (plus closing costs and reserves!) and big monthly loan payments (plus property tax and insurance!) for a traditional 30year fixed-rate home loan are simply out of the question. Perhaps, it’s time to rethink going the traditional route to homeownership. You may know the tried-and-true 30year fixed-rate home loan. But did you know that about 10% of American homeowners have taken a different path to achieving the American dream? These people have discovered that an adjustable-rate mortgage (ARM) can be a viable financing option that makes owning a home more affordable and realistic.

HOW DOES IT WORK?

Lenders set the interest rate for ARMs by matching the loan to a widely used financial index rate, and then adding their own margin. The margin stays constant, but the index can change. In turn, the borrower’s interest rate can change, too. It can increase or decrease. This means during certain periods your monthly payment can go up or down, also.

ARMs have backstops that protect consumers from rising rates. First, your ARM interest rate will stay the same for a few years. Then, it can only adjust once a year. There are limits on these adjustments, known as annual caps, that prevent the rate from increasing too much in any given year. Finally, there is a maximum rate, called a lifetime cap, that cannot be exceeded.

WHO SHOULD CONSIDER AN ADJUSTABLE-RATE MORTGAGE?

You should consider an ARM if: n You want lower monthly payments for several years, or you want to qualify for a larger home loan n You plan to sell your home before your rate adjusts (the average length of time people own their home is only 8 years) n You anticipate that your income will increase over time, so higher monthly payments are not necessarily an issue n You are comfortable with the fact that after a few years, your monthly payments may increase once a year

Keep in mind that when rates drop, if you have sufficient equity in your home and qualifying income and credit, you may be able to refinance your ARM and get a low, fixed-rate on a traditional 30-year loan.

If you’re interested in learning more about how you may be able to afford a home in today’s market or have any home buying questions, reach out to one of our expert Mortgage Loan Officers at (877) 6952732. They will happily walk you through your best options for purchasing a home. They can also share information with you about special programs that don’t require a 20% down payment.

We’ll close by making it clear our mission is to improve your quality of life and financial wellbeing. We will only recommend options that you are comfortable with and that truly benefit you. As your trusted advocate, doing what’s in your best interest is our guiding principle in all matters and when it comes to helping you achieve the American dream.

Remember Our Fallen Heroes

MEMORIAL T-SHIRT FUNDRAISER

Honor our fallen heroes with a special-edition memorial t-shirt from LAPFCU. All proceeds will directly benefit the families of fallen officers.1

ORDER ONLINE: April 25 – May 6 at lapfcu.org/memorial-shirt or scan the QR code.

BUY IN PERSON: May 15 – 19. T-shirts will be available to purchase in-person at our branches ONLY during National Police Week. *Limited

HERO:

Scan an ordinary person who faces extraordinary circumstances and acts with courage, honor, and self-sacrifice.

SATURDAY, MAY 6 | 8:30-11:30 A.M.*

ONTARIO POLICE DEPARTMENT PARKING LOT 2500 South Archibald Ave., Ontario, CA 91761

SATURDAY, JUNE 3 | 8:30-11:30 A.M.*

LAPFCU BREWER BRANCH PARKING LOT (ARTC) 5651 West Manchester Ave., Los Angeles, CA 90045