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Adjustable Rate Mortgages, or ARMs, are home loans with a variable interest rate based on the movement of a specified financial index. These loans have an initial fixed rate that will vary after a set term has expired. This gives ARM loans the advantage of being able to offer a lower initial interest rate than possible with a fixed rate mortgage. |
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| Adjustable Rate Mortgages |
| Interest Rate |
Interest rate is fixed for a specified period, then adjusts annually after the fixed period has expired |
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Loan Term |
- 1, 3, 5, 7 and 10 Year ARMs
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| Benefits
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- Lower initial interest rate minimizes your monthly payment
- Certain loan programs may easily convert to a fixed rate loan
- You may qualify for a higher sales price
- Annual and lifetime rate caps limit interest rate movement
- Loan may be fully assumable depending on loan program
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May be right for you if...
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You want to increase your buying power while minimizing your monthly payment
- You're expecting a future increase in income
- You're planning to relocate, refinance, or move to a larger home in the next few years
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* A 30-year conventional Fixed Rate Mortgage of $200,000 with a 20% down payment at 6.906% APR with 0 points and 1% origination fee would result in 360 payments of $1,297.20. A 30-year 5/1 Adjustable Rate Mortgage (ARM) of $200,000 with a 20% down payment at 6.526% APR with 0 points and 1% origination fee would result in 360 payments of $1,247.74. APR may increase after consummation. |
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