How It Works

After the fixed-rate period, an ARM’s rate fluctuates based on the current index. At the time of the change, often done annually, the lender adds the current index to a set margin to determine the new rate and payment. The frequency your rate can change, type of index used, set margin, maximum amount your rate can change each time, as well as the maximum and minimum rate allowed for the life of the loan are spelled out in the loan closing documents. The process repeats each time an adjustment date rolls around.

While ARM loans can seem complicated, there is no need to worry as our Mortgage Bankers are always ready to walk you through the ins and outs of an adjustable-rate mortgage. They are a great option if you plan to move within seven years. Adjustable-rate mortgage rates tend to be lower and therefore less expensive in the short term than fixed-rate mortgages, but have the potential to rise after the fixed-rate period.

Is an ARM Right for You?

There are many reasons why an ARM might be the right fit for you:

Lower Payments and Initial Interest Rate

During the fixed rate period, ARMs generally have a lower interest rate than fixed-rate loans for the same term and therefore the monthly payment is lower.