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"Keith Brown got us a great rate on the right type of loan. When there was an underwriting issue, he solved it so we closed on time with no surprises." Learn more »

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Which type of home loan or refinance is right for you?

How much mortgage can you afford? Are you eligible for a VA or FHA loan? What type of conventional mortgage programs might answer your needs? Are 5-7 year ARMs worth considering? What is a jumbo mortgage and what rate differences apply? How can I reduce or work around expensive Mortgage Insurance with a downpayment of less than 20%.

To find the right answers, Keith Brown looks at your credit, income, debt and how long you plan on being in your home.  He can then draw on the direct-lending resources of Intercoastal Mortgage to secure you the best rates and terms. You end up with a mortgage that’s the best fit for your budget and your plans for the future.

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ARMs (Adjustable Rate Mortgages)

Adjustable Rate Mortgages (ARM)Adjustable Rate Mortgages typically offer lower interest rates than a fixed rate mortgage because the interest rate is only guaranteed for a specific time frame. ARMs are useful for buyers who are trying to maximize their purchasing power or for buyers who plan on owning a home for a specific period of time. ARM time frames are traditionally for 10, 7, 5, and 3 years. All of these loans are for a 30-year terms.

Every ARM has a Life Cap which provides a limit as to how high the rate can adjust after the initial period has concluded and typically a yearly adjustment which also limits how much the rate can fluctuate from year to year. Once your initial interest rate period has been completed, the new interest rate is then calculated on the anniversary of your mortgage by adding a pre-determined margin to an index. The index is the instrument we use to determine the future interest rate. Typical indices are the Treasury Bill (T-Bill), London Interbank Offered Rate (LIBOR), and the Monthly Treasury Average (MTA). Your ARM can also be refinanced at anytime into a fixed rate or another ARM product.


Adjustable rate mortgages (ARM's) have an initial short-term fixed rate period and then convert to a rate that adjusts annually. For example, a 5/1 ARM would have an initial fixed rate period of 5 years; starting year 6 the rate would change annually until paid off/refinanced. ARM's are available with initial fixed rate terms of 3,5,7 and 10 year terms. The shorter the initial fixed term, the lower the interest rate. ARM's are a great option when the borrower knows they will only be in the home for a limited number of years. Of course, the risk is at the end of the initial fixed period the rate can increase significantly.

What You Need to Know on ARM's

When your rate adjusts, the new rate is calculated upon an Index and a Margin. The most common Index is normally the 1 year LIBOR. These are market indices and fluctuate with interest rate changes. The Margin is a fixed number typically at 2.25%. For example, on 02/12/2018 the yield on the LIBOR index was 2.319%. Adding a Margin of 2.25% to the index would give the new adjusted interest rate of 4.569% This is how a new interest rate is determined when an ARM begins to adjust.

What your new rate adjusts to is determined by Caps.There are three Caps that you need to be aware of: the initial adjustment cap limits how much your initial fixed rate can change when the loan initially adjusts. Most initial Caps are 5%. The next Cap is the annual adjustment cap. This determines how much your rate can change each year after the initial adjustment. This is normally set at 2% per year. The final Cap is the loan's life-time cap. This determines how much your rate can change over the life of your loan. Normally this is set at 5%. Thus a 5/2/5 Cap would mean a 5% initial rate cap; 2% annual cap; and a 5% life of loan cap. Occasionally you will see 2/2/6 caps. It is important to know how your rate will change once the initial fixed rate period ends.