Adjustable Rate Mortgage

Interest Rate May Change Over the Life of the Loan.


For some homeowners, the idea of keeping their mortgage payments low (at least for a few years at the beginning of the payment period) is quite attractive. That's why we offer our convenient Adjustable Rate Mortgage (ARM).

Here's a quick overview:

  • ARMs typically offer lower initial interest rates than fixed-rate mortgages. However, the interest rate may change at set adjustment intervals over the life of the loan.

  • Fixed interest rate periods are offered on Federal Housing Administration (FHA), Veterans Affairs (VA) and conventional mortgages. The rate is subject to adjustment every subsequent year following the fixed-rate period.

  • ARMs can be based on one of several indices and usually have a cap associated with them to limit risk to the borrower.

  • Fluctuations in indices can affect the ARM's interest rate if the index is higher or lower on the adjustment date than it was during the fixed period or on a previous adjustment date.

  • A cap restricts how much an interest rate can change at each adjustment date or how high an interest rate can rise over the life of the loan.

  • ARMs are available for purchases and refinances.

  • ARMs generally permit borrowers to lower their initial monthly payments if they are willing to assume the risk of interest rate changes. If the interest rate increases or decreases, the Principal and Interest (P&I) portion of the monthly payment will also increase or decrease relative to any changes to the interest rate. In addition, changes in property taxes or insurance premiums, which can be collected in your monthly payment in addition to the P&I mortgage payment, could raise or lower the total amount you pay each month, otherwise known as PITI (Principle Interest Taxes and Insurance).

Is an Adjustable Rate Mortgage right for you?


Talk to one of our Mortgage Lenders to determine the best mortgage option for you and your financial situation. For more information, contact us now.