Adjustable
An Adjustable Rate Mortgage (ARM) has a variable interest rate that will change periodically
depending on changes in a corresponding
financial index associated with the loan. Your monthly payment will adjust if the index rate goes
up
or down.
The most obvious benefit of an adjustable rate mortgage is the lower payment that it offers you
early on in the loan term.
An ARM may be a good option to consider if you plan to own your home for only a few years; you
want
a lower payment than a fixed-rate mortgage usually offers, or you expect an increase to your
future
earnings.
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Lower Interest rates and Lower Payments early on in the term.
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Interest rate is fixed for a period of 5, 7 or 10 years. After that, your interest rate may
change annually.