What is the difference between an ARM (Adjustable rate mortgage) and a VRM (Variable rate mortgage)?
This is a great question and one that has become extremely relevant over the past few years. Both options are tied to the lender’s Prime lending rate. For example, you may receive an option for your mortgage rate to be “Prime minus 1%”, this simply means that your mortgage interest rate would be the lender’s Prime rate minus 1%. If the Prime lending rate was 6.7%, your effective interest rate would be 5.7% (6.7% - 1%).
With the increase of interest rates and inflation, many consumers are feeling the effect of increased prices and cost of living. There may be a solution that can help without the burden of an additional monthly payment. In fact, in many cases, not only is there no additional monthly payment but the existing monthly payments may be erased as well. The result is a much needed stress relief and the ability to live at the lifestyle that we have been accustomed to while at the same time age in our own home. The Reverse Mortgage may be the answer and the process is very simple.
This is a great question, and is on the minds of many mortgage holders. The answer is not so simple and may not have such a simple answer as “Yes” or “No”. Let’s analyze what may be involved in this decision. The best decision will be the one that you can live with and be comfortable with.
If you are a real estate investor who is into buying and selling properties (flipping homes for profit) and do this full time then you know it is a very arduous process when securing a short term mortgage through a traditional bank type lender.
This is simply because the traditional bank type lender is designed to operate their business with long term return on investment in mind. Also, the guidelines they function under requires fully underwritten applications involving credit, income, debt, and documentation review.