Adjustable Rate Mortgage (ARM)
Low Rates for an initial Fixed Term!
Rates become adjustable after initial term!
Get a lower rate and a lower payment.
The Adjustable Rate option is possibly a good idea for anybody planning to move within 7 years.
A mortgage in which the rate of interest is adjusted based on a standard rate index. Most ARMs have caps on how much the interest rate may increase, after the fixed term. ARM Loan payments and rates can be fixed for a specific term, up to 10 years.
Okay, now what does that mean in English…
An adjustable rate mortgage, does not apply the same interest rate toward monthly payments for the life of the loan. Throughout the life of that loan, the homebuyer’s principal and interest payment will adjust periodically based on fluctuations in the interest rate. The interest rate offered can be fixed for a period of 1 or 6 months, and 1, 2, 3, 5, 7, and 10 years.