Is it time to pull money out of your home for an important expense? Is an adjustable rate mortgage , or ARM, something that you should be considering? An adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and the payments you make, are adjusted up or down every so often as the index changes. An index is a guide that lenders use to measure interest rate changes. Each ARM is linked to a specific index. To keep from paying an interest that has shot sky high, borrowers have protection from extreme changes because ARMs come with caps. These caps limit the amount by which ARM rates and payments can adjust.
Adjustable rate mortgages come in a variety of options and terms. Take a look at the options listed below to get a basic idea of your options and contact one of our trained professionals with additional questions.
10 year ARM
20 year ARM
It is also possible to convert an adjustable rate mortgage to a fixed rate mortgage at a later time when it suits your situation better. Make sure to ask your lender to keep this option open for you if you choose to use it.
Adjustable rate mortgages are complicated and can be very hard to understand. We get lots of questions from prospective loan customers and one of the most commonly asked is; “Is an adjustable rate mortgage right for me?”
The answer is is yes if you’d like to take advantage of a lower interest rate in the future.
Another question we get a lot of is “How do the ARM’s differ from a fixed rate mortgage?”
Adjustable-rate mortgages, or ARMs, differ from fixed-rate mortgages in that the interest rate and monthly payment move up and down as market interest rates fluctuate.
Recent news reports showed that the Federal Reserve raised interest rates last week for the 15th time since June 2004 and signaled that at least one more increase is likely. The time may be now to get that adjustable rate mortgage quote.