Adjustable Rate Loans
(ARMs)
Adjustable-rate mortgages (also called ARMs) feature
an interest rate that periodically adjusts with
changing market rates. ARMs are attractive because
they offer start rates that are lower than the
interest rates of fixed rate home loans. This
typically enables you to begin with lower monthly
payments and qualify for a larger loan.
ARMs are available in government, conforming and
jumbo loan amounts. A start rate, also known as
the initial interest rate, gives you a special
low monthly payment for a set amount of time,
which is typically 1, 3, 5, 7 or 10 years.
After the start rate period is over, your interest
rate is based on the performance of a financial
index, such as the average interest rate or yield
on treasury bills. Before you agree to an ARM,
be sure you can afford the highest payments that
would result.
Choose an adjustable-rate loan if you:
- Want extra borrowing power
- Want a lower initial rate to afford
to buy the home you want
- Want to save money in the first few
years of home ownership
- Plan to move or refinance in a few
years
- Are confident your income will rise
enough in the coming years to handle any
increase in payments
- Are purchasing or refinancing at a time
when interest rates are comparatively
high
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What You Need to Know:
Contact a Mortgage
Loan Officer to go over any questions you
may have or call our Mortgage Call Center at 1-888-993-8754.
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