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Adjustable Rate Mortgages
An Adjustable Rate Mortgage offers a low rate that is fixed for the first five years. This type of mortgage allows you to free the equity from your home or to refinance and lower your monthly payments to rates you thought you had missed.
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ADJUSTABLE RATE MORTGAGE - WHAT YOU SHOULD KNOW
The adjustable rate mortgage (ARM) is often a bargain. So are the 30-year, fixed-rate loans under 10 percent.
Some important details you should know about your ARM selection are:
How often will it adjust?
What is your index? The index is the identified base used to set your rate every time it adjusts - for example, a one-year treasury security for a one-year ARM.
What is your margin? Margin is the spread between the index and your new rate at the time of adjustment.
What are your caps? Caps are the maximum adjustments allowed, both short-term and for the life of the mortgage loan.
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