Adjustable Rate Mortgage

What is an Adjustable Rate Mortgage?

An Adjustable Rate Mortgage (ARM) is a mortgage loan with an interest rate that can increase or decrease periodically.

This means that the monthly payment can go up or down depending on market conditions.

Most ARM loans have a period in the beginning of the loan where the loan is fixed.

After a certain amount of time the loan converts into a fully adjustable loan with pre set adjustment periods.

The 5/1 ARM is the most common adjustable rate mortgage on the market. In a 5/1 ARM the loan is fixed for the first 5 years, then following with an interest rate adjustment once every year.

Adjustable Rate Mortgage Pros & Cons

Interest rates and mortgage payments are less than fixed rate mortgages After the fixed rate period ends, the interest rate could rise, so the monthly payment could go up, too
The rate may decrease after the 1st adjustment Interest rates are unpredictable, so you can't predict what your payments will be in the future
Allows the borrower to qualify for a larger loan
Perfect for homeowners who plan to live in the property less than the initial term

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If you're interested in a adjustable rate mortgage and you want more information or if you would like to get started then leave a message or give us a call at 661.799.8515.