An ARM (or adjustable rate mortgage) has an interest rate that changes based on changing market rates and economic trends. This kind of mortgage usually offers an initial interest rate that is two to three percentage points lower than that of fixed-rate mortgages, but it doesn’t offer the stability or assurance of a known mortgage payment in the years to come. An ARM has the following attributes:
- It usually offers a lower initial interest rate (start rate) than fixed-rate loans.
- The interest rate on an adjustable rate mortgage (ARM) is adjusted periodically based on an index that reflects changes in market interest rates.
- ARMs have defined adjustment periods that determine how frequently the interest rate can change.
ARMs are ideal for borrowers anticipating moving into a fixed payment program later or who have shorter-term ownership plans. Let us help you evaluate your personal situation and assist you in finding the right loan program that works best to meet your individual goals and needs.