ADJUSTABLE RATE MORTGAGE
WE’LL HELP YOU FIND THE RIGHT LOAN AND BEST RATES!
What is Adjustable Rate Mortgage (ARM)?
A home loan with an interest rate that can adjust based upon the market and terms of the note. Most ARM’s adjust annually, with both a yearly and lifetime cap based on the Libor. Some years, your rate may adjust to it’s max and others it may not adjust at all. Popular terms are the 3, 5, 7 and 10-year ARM’s, where the rate is fixed for those initial years and adjust after the fixed period. The payment is amortized over a 30-year term.
Advantages: ARM’s typically offer a lower initial rate, in times when mortgage rates drop, your ARM may have the ability to reduce your rate, ideal for those remaining in their home 5 or less years.
What To Consider When Considering an Adjustable Rate Mortgage?
An adjustable rate mortgage (ARM) has an interest rate that fluctuates periodically unlike a fixed rate mortgage, which always has the same interest rate.
Every ARM has basic components:
- An index
- A margin
- Adjustment Period
- An interest rate cap
- An initial interest rate