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Jim Tait 02/01-02/28/17

home : new product review : new product review August 24, 2017

3/21/2013 12:45:00 PM
CoVantage Credit Union provides it all

Here is what CoVantage Credit Union offers for you, the customer:

Best Mortgage for you

Fixed rate mortgages with historical low rates are all over the news, so everyone should get a 30-year fixed rate mortgage right? 

The answer is no. 

There are alternative mortgage products that may better fit the borrower's needs.


Many borrowers are afraid when they hear "Adjustable Rate Mortgage (ARM)," and are against any loan that has an ARM feature. An ARM loan may actually be the best fit for many borrowers since the terms and closing costs fit their current living situation. The average length of time for a mortgage loan is 7-8 years, since many borrowers either sell their home or refinance the mortgage to add on for debt consolidation, remodeling, college funding, or just a lower rate or term. 

With the average term at less than 10 years, this means that most of the time a 30-year fixed rate mortgage is not necessary because the loan will be paid off or refinanced long before the 30 years. 

Therefore, a 3/1, 5/1 or 10/1 ARM loan product may be a perfect fit for many borrowers. The types of ARMS mentioned above have fixed rates for the first three, five or 10 years, followed by rates that adjust annually thereafter. 

When the rate is set to adjust, it fluctuates at the same rate as an index (i.e. Current T-bill Rate) spelled out in the closing documents. Borrowers also have protection from extreme changes because ARMs come with interest rate caps or maximums. 

The benefit of many ARM products is that they are retained "in-house" by the local financial, which means there is local decision-making, and collection of payments. Many financials allow weekly or bi-weekly payments on their "in-house" loans, which is not available with the 30 year fixed rate product. 

Oftentimes the closing costs are also lower for the "in-house" products than they are for the fixed rate or "sold" loans, as the local financial has more control over appraisal and title requirements. 

You will find all these benefits, and more, when you have your mortgage with CoVantage Credit Union.

Rapid Refinance Loans

Along with the ARM loans, many local financials also have shorter term "Rapid Refinance" loans that are attractive to borrowers that have lower loan balances. These loans have a term of 10 years or less. They are also kept in-house by lenders, which may allow for weekly or bi-weekly payments that help lower the overall interest cost as well.

When looking for a mortgage, be sure to consider how long you plan to be in the home or consider your long term financial needs in regards to the home. 

Talk to a mortgage lender at CoVantage Credit Union, as they can help advise you of the products available, and the positives and negative of each product. There is no one-size-fits-all mortgage as every borrower's situation is different.

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