An Adjustable rate mortgage loan (ARM) is a mortgage in which the interest rate and payments are adjusted periodically based on a pre-selected index. Subject to certain limitations, the rate and payments on an ARM loan rise and fall with the market.
Our 3/1, 5/1, 7/1, and 10/1 ARMs allow you to pay a lower introductory interest rate than many fixed-rate mortgages offer. Your interest rate and payment are fixed for the initial fixed rate period of 3, 5, 7, or 10 years, depending on the program you select. After the initial fixed period, your interest rate and payment will follow the movement of the index up and down, with certain limits. Our ARMs are among our most popular loans because they help you qualify for a larger home, there is no negative amortization, and your loan may be assumable after the fixed rate period of the loan.
It is important to note that with an ARM, you may have a substantial increase in payment after the fixed-rate period and the interest rate over the life of the loan can typically increase five to six percentage points above the initial interest rate.