Adjustable Rate Mortgages - (ARM's)
An Adjustable Rate Mortgage is a mortgage that begins with an initial low fixed rate for 1, 3, 5, 7, or 10 years and after that, will adjust annually. There are 'Rate Caps' that prohibit your rate from exceeding the maximum allowable increase and decrease when the rate is reset.
Advantages
- Gives you set payments for a specific period of time - 1, 3, 5, 7, or 10 years.
- Low qualifying rates
- Affordable home financing
Consider a Traditional ARM if:
- You want the stability of a low fixed rate for a set period of time.
- You prefer to keep extra cash on-hand for investing or other needs.
- You're looking for a fully-amortizing product.
- You intend to stay in the home for 5 years or less.
Variations
- 15 and 30 year terms
- 1, 3, 5, 7 or 10 years initial fixed rate period before adjusting.