Adjustable-Rate Mortgages

A hybrid mortgage with a blend of fixed and adjustable rates.

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Overview of Adjustable-Rate Mortgages

Adjustable-rate mortgages (ARMs) are hybrid mortgages, because they have a fixed rate for the first part of the loan and then an adjustable rate following the initial fixed rate period. This loan type usually provides you with a lower initial interest rate compared to fixed-rate mortgages, upfront savings on interest, and offers a lower initial monthly payment. An adjustable rate mortgage is a good option if you plan to sell or refinance in the near term.

Adjustable-Rate Mortgage Key Takeaways

After the initial fixed-rate period, interest rates may change periodically based on loan terms and market conditions.

Flexible Terms

Choose from several available term options including 5/5, 7/1, or 10/1 ARMS. Benefit from an initial fixed-rate period and a competitive interest rate.

Interest Rate Ceilings

Limit your risk with protection from large swings in interest rates. Interest rate caps put limits on interest rates and monthly payments.

Short Term Option

An Adjustable Rate Mortgage is a great option if you plan to move or refinance again within a few years due to a life event.

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For example purposes, a home worth $625,000 obtaining a 5/5 adjustable-rate mortgage with 20% down at a note rate of 8.50% and an APR of 8.583% would have a monthly Principal and Interest payment of $3,844.57. The interest rate would remain the same for the first five years, and then would adjust every five years after that.