Sunrise Banks Adjustable-Rate Mortgages: Is an ARM Right for You?

Toy house on top of papers

Are you interested in buying a home but concerned about rising interest rates and home prices?

Sunrise Banks offers adjustable-rate mortgages, or ARMs1.  Although they can be a more affordable alternative to fixed-rate mortgages, which might be intimidating for many homebuyers in the current housing market, ARMs can be more complex.

We’re here to shine a spotlight on Sunrise’s ARM products, explain the details, and help you determine if one might be a good fit for you.

ARMs vs. Fixed-Rate Mortgages

The biggest difference between an adjustable-rate mortgage and a fixed-rate mortgage might be fairly obvious. An ARM is a mortgage with an interest rate that can change over time, depending on market conditions. A fixed-rate mortgage is more straightforward – it’s a loan with a consistent interest rate throughout its course.

We’ve previously outlined the specific differences between ARMs and fixed-rate mortgages on the blog, so check that out for a refresher. Understanding the different types of home loans – and determining which one is right for you – is one of the first crucial steps in preparing to buy a home.

Benefits of an Adjustable-Rate Mortgage

Soaring interest rates and rising home prices are among the many outcomes of the global pandemic. As a result, ARMs are increasing in popularity thanks to the following benefits typically accompanying this type of mortgage:

  • Borrowers can expect an initial interest rate that is lower than fixed-rate mortgages.
  • A cap on the interest rate limits the maximum amount charged during the ARM’s lifespan.
  • Borrowers can take advantage of the market’s falling interest rates without having to refinance.
  • ARMs can provide a more affordable option for buyers looking to stay in the home for only a short time (usually 5-7 years).
  • ARMs offer flexibility for borrowers who expect a future growth in income.

Discover Sunrise’s Adjustable-Rate Mortgages

Sunrise is currently offering two different ARM products – a 5/6 ARM and a 7/6 ARM – available up to $1.2 million. Not a mortgage lender? Let’s break down these loan terms.

The first number indicates how long the starting interest rate will remain fixed. So, with Sunrise’s ARM products, the rate remains consistent for either the first five or seven years.

The second number indicates how often interest rates can adjust after that initial fixed period. For both Sunrise ARM products, rates can be adjusted every six months once that initial period has ended.

Contact a Sunrise lender for current ARM rates.

ARM rates are then allowed to adjust following the fixed period. When rates change, your payment amount can increase or decrease. On Sunrise’s ARM products, there is a 2% cap per adjustment – and a lifetime cap of 5% above the starting rate.

Requirements for Sunrise’s ARMs

You’ll find eligibility requirements for most loans, and ARMs are no exception. Qualifications for Sunrise’s ARMs focus on credit scores and down payments.

Credit Score

A credit score is a three-digit number that represents your creditworthiness and how likely you are to repay debts. In a nutshell, this score indicates to potential lenders whether you’ve managed credit responsibly or if it’s too risky to lend to you. You may be wondering, what’s a good credit score? To qualify for a Sunrise ARM, a minimum credit score of 680 is required.

Down Payment

The down payment process is another important part of the homeownership journey requiring planning and preparation. A down payment on a home is the portion of the purchase price the buyer pays up front, with the remainder being covered by the mortgage and repaid monthly. Eligibility for a Sunrise ARM includes a minimum 5% down payment.

A Final Word on ARMs

At Sunrise Banks, we want to help you own your own home – even during a hike in market prices. Our mortgage lenders can assist you in navigating your unique path to home ownership – talk with one today!

1 . The APR may be increased after loan consummation.