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ARMs (Adjustable Rate Mortgages)

ARMs (Adjustable Rate Mortgages) Loans can be used to purchase or refinance and are popular because of the upfront savings they offer. The interest rate adjusts to the market after a set period according to the term; when the fixed period ends and your rate adjusts, interest rates changes are capped.

ARM Mortgage Benefits

  • Upfront savings: The lower rate and payment during the initial period of the loan, frees up cash flow

  • Initial fixed period: A lower rate for the initial period

  • Cap on the amount paid: There are limits on the interest rate adjustment

 

Adjustable Rate Mortgages benefits:

  • A low initial interest rate and payment

  • Preferred if for borrowers who move frequently

  • Good for borrowers who expect to earn more in a few years

  • Borrowers that purchase, renovate, and resell properties

  • Borrowers that plan to refinance before the loan adjusts

  • Borrowers who have growing families and need a larger home in the future

 

ARM Loan Requirements

  • Credit history will be considered before being qualified.

  • The loan amount for a conforming ARM loan is typically $424,100. However, the limit may be higher depending on the region.

  • The down payment is usually the same as traditional loans

  • There are loan types that allow for lower down payments as well as down payment assistance resources

 

ARM Loan Options

  • Purchase

  • Refinance

  • Cash-Out Refinance

 

VA ARM, FHA ARM, and Jumbo ARM loans have an initial fixed rate period, after that the rate adjusts.

There are several terms to choose from:

  • 5 Year ARM - The 5 Year ARM is an option for FHA, VA, Conventional, and Jumbo loans.

  • 7 Year ARM - The 7 Year ARM is an option for Conventional and Jumbo loans.

  • 10 Year ARM - The 10 Year ARM is an option for Conventional and Jumbo loans.