Adjustable-Rate Mortgage (ARM) Programs

Adjustable Rate Mortgages let you purchase more home for less money every month.

What Are Adjustable-Rate Mortgages (ARMs)?

These loans – amortized over 30 years – feature a low initial interest rate, which remains stable for a certain period of time, generally 1-3-5-7 years. After this fixed period ends, the rate can then adjust (increase or decrease) depending on prevailing market conditions. As the rate adjusts, so will your monthly payment.
Generally, the initial rate on adjustable-rate mortgage (ARM) loans comes in under that of a fixed-rate mortgage, thus giving you a lower monthly payment.

How Long Are Adjustable-Rate Mortgages (ARMs)?

The length of the initial, fixed period of these mortgages can last anywhere from 1, 3, 5 or 7 years. After that initial period elapses, the rate could then adjust – based on certain market conditions – every 12 months. However, there are “floor” and “ceiling” caps as to how far the rate can go up or down at that adjustment time and over the life of the loan.
The caps are tied to published indexes such as the LIBOR index.
Usually, the shorter the initial period (3 vs. 5 years for example), the lower the initial rate with adjustable-rate mortgages (ARMs).

Who Are Adjustable-Rate Mortgages (ARMs) For?

People who are looking for a loan program with a lower initial monthly mortgage payment than what they could get with a traditional fixed-rate mortgage.
Individuals who only plan on staying in a house for 7 years or less, and therefore, don’t need the stability of a fixed payment for longer than that.

Remember that the adjustable-rate mortgage (ARM) loan programs available to you will depend on a number of different factors including your financial situation and location.