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Carla Pennington, Realtor®
Paula Thomas Real Estate Group
101 Cooperative Way Suite 205
Georgetown, TX 78626
Mobile: 512-635-2117
Email: Carla@CarlaPennington.com
 






Thank you for visiting today. If this is your first visit, take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you!

Let's schedule a "get acquainted" call!  I would love to hear from you and talk about how we can achieve your real estate goals together.    

"What does the Lord require of me? To act justly, love mercy and walk humbly with my God." Micah 6:8

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Adjustable Rate Mortgages - The Basics

An adjustable rate mortgage (ARM) has an interest rate that fluctuates periodically. This is in contrast to a fixed rate mortgage, which always has the same interest rate.

Every ARM has basic components:

  1. An index
  2. A margin
  3. Adjustment Period
  4. An interest rate cap
  5. An initial interest rate

The Index

An ARM’s interest rate is tied to one of many economic indices, some examples of which are the 1-year constant maturity Treasury security, the Cost of Funds Index, or the London Interbank Offered Rate. Different indices move at different rates so know the characteristics of the index used for your ARM.

The Margin

The interest rate for your ARM will be calculated by adding a margin to the interest rate from the index. The margin is basically the markup charged by the lender that allows them to make a profit off of your loan, such as adding 2% to the index, where the 2% is the margin. The margin of your loan usually does not fluctuate.

The Adjustment Period

The Adjustment Period controls when and how often your interest rate changes. For example, if your ARM has an adjustment period of 1 year, your interest rate will be subject to change at the end of each year and your monthly mortgage payment will be recalculated to reflect this change.

The Interest Rate Cap

Interest rate caps are built into the loan to protect the borrower from drastic interest rate fluctuations. The caps limit how much the interest rate or monthly payment can change at the end of each adjustment period. An ARM can also have a cap for the life of the loan. For example, during the life of a loan, the interest rate can only be increased by 5%.

The Initial Interest Rate

The Initial Interest Rate is the interest rate that you start with at the beginning of your loan period. The length of time your loan stays at this rate is built into the loan. For example, you may stay at the initial interest rate for 1 year, 5 years, or another length of time depending on your specific mortgage. This type of ARM is generally referred to as a Hybrid ARM. The initial interest rate for an adjustable rate mortgage is generally lower than that of a fixed rate mortgage.

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Testimonials

Carla is a knowledgeable and honest agent who helped us buy our dream retirement home in Georgetown. She is very knowledgeable about the area, spent many hours showing us real estate that fit our taste and budget and became our advocate and negotiator when we found the house we wanted. Carla works for a great broker and if there were any questions that she wanted a second opinon on, she had immediate access to her staff and office. I would not hesitate to use Carla again and recommend her highly to all who want both a pleasant and profitable outcome for their real estate search. Mark & Sue
Carla Pennington has been our realtor for several years now in both buying and selling real estate.  She also has served as our leasing agent on homes that we own!  We totally trust Carla on her advice in our transactions and will continue to use her services in future transactions!  We consider her a friend! Great communicator, easy to work with, understood and found our needs. All round great lady & we've really enjoyed working with her! Dawn & Betty
We were at a potential purchase property and on a whim picked Carla's card from a stack that were on a table in the kitchen (front door wasn't locked so we let ourselves in). This whim was a blessing in disguise as Carla has to be one of the most attentive and considerate real estate representatives that I have ever had the pleasure to work with. She was very quick to respond, attentive to our needs, considerate of our small children, flexible in scheduling and just an overall downright wonderful experience. She left a 'good taste in our mouth' so to speak. Another plus for Carla is that my 20 month old daughter 'likes' no one and never gives hugs away. At our first meeting with Carla, our daughter gave her 2 hugs and has given her one each time she has seen her since. To me - this speaks volumes to Carla's stellar character. My husband & I would highly recommend Carla to anyone that wants an enjoyable and stress free buying/selling experience. Carla's counterparts in the Paula Thomas Real Estate Group are more than willing to step up to the plate should for any reason Carla not be able to assist and to me this makes a wonderful 'family' group to work with for a job well done! thanks Carla! Kelly & Shannon
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