Adjustable Rate Mortgage

Adjustable-Rate Morgage (ARM)

An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down. Generally, the initial interest rate is lower than that of a comparable fixed-rate mortgage. After that period ends, interest rates — and your monthly payments — can go lower or higher.

Here’s who benefits from an adjustable rate mortgage:

  • First-time home buyers – the ARM allows easy access to people who may not be able to finance a 30 year fixed rate mortgage.
  • The young, more mobile home buyer – Whether you’re starting a family soon, or advancing in your career and may need to move to another city, you’ll benefit from the lower introductory interest rates of an ARM. These are great mortgages if you’re looking to buy a starter home!
  • Short-term homeowners – if you don’t see yourself living in the same house for more than 5-7 years, an ARM makes more sense than a 30 year fixed rate mortgage.
  • People who see their income increasing are prime candidates for this type of mortgage since many people refinance before the interest rate has time to adjust.
  • Consumer Handbook on Adjustable Rate Mortgages
  • Purchase Home 

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