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Unlock the Power of Portfolio Loans with an Adjustable-Rate Mortgage

Looking for a home loan? When considering your borrowing options, you’ll need to decide whether to select a fixed rate or adjustable-rate mortgage (ARM). However, it’s equally important to understand whether your loan will remain with the lender as a portfolio loan or if it will transfer to a third party on the secondary market.

In this blog, you can explore why adjustable-rate mortgages from a lender offering a portfolio loan gives you some distinct advantages and provides you with tools to become a well-informed and savvy homebuyer.

Advantages of Portfolio Loans with ARMs

What is a portfolio loan? Unlike traditional mortgages that are sold to government sponsored entities like Fannie Mae or Freddie Mac, portfolio loans are a type of mortgage that is originated and held by the lender. This keeps the loan in the lender’s “portfolio” of assets.

A few of the benefits of a portfolio loan include, but are not limited to:

  • They provide the mortgage lender with more flexibility.
  • ARM portfolio loans are more capable of fitting your unique financial situation. Instead of a one-size-fits-all approach, the process is more personalized.
  • Borrowers could take advantage of lower initial interest rates compared to a traditional fixed-rate mortgage. 

The personalized approach of portfolio lending allows borrowers to work together on ARM loans that truly fit their needs. For borrowers whose situations call for more creative loan terms, portfolio lending offers customized solutions when the secondary market cannot.

Who Could Benefit from a Portfolio Loan ARM?

Different borrowers could benefit from the advantages of a portfolio loan for an adjustable-rate mortgage. Irregular income streams, financial obstacles, or other considerations could make a borrower more interested in portfolio lending, including borrowers who are:

  • Self-employed Borrowers with Irregular Income
  • Borrowers with Complicated Credit Histories that Need a More Holistic Approach
  • Borrowers Looking for Jumbo Loans or Loans Exceeding Standard Loan Limits

The right portfolio loan can make homeownership more accessible for niche demographics with specialized needs mismatched from one-size-fits-all secondary market offerings.

home bought with an adjustable-rate mortgage from a portfolio loan

Helping You Prepare to Discuss Portfolio Lending and ARMs

Getting an adjustable-rate mortgage through a portfolio lender could be right for you if you want something tailored to your financial situation. Read more for a quick review on the portfolio lending process. Use the information below to help you be better prepared for securing your ideal adjustable-rate mortgage loan:

  • When applying, be prepared to discuss your finances. Portfolio loans remain with the lender, so it’s important to demonstrate stability.
  • Plan on discussing interest rates, as well as what rates make you most comfortable. Work with your mortgage banker to outline your rate preferences. Together, you can customize your adjustable-rate mortgage terms.
  • Be honest and upfront with your lender. If you experience financial changes during the process, let them know. They can help restructure your loan based on new information.

Securing a portfolio loan means you’ll have and maintain a direct relationship with your lending institution. This provides you with an avenue for open communication if your situation changes.

Adjustable-Rate Mortgages: Finding the Right Lending Option for You

For those who want or need more creative mortgage solutions, portfolio adjustable-rate mortgages present an excellent option over secondary market offerings. By understanding these lending alternatives and being prepared to have an in-depth discussion with your lender, borrowers can unlock financing that truly fits their needs.

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