Specialty Program
Adjustable Rate Mortgage
Flexible rates. Potential savings.
Adjustable Rate Mortgages (ARMs) offer lower initial interest rates that adjust over time, making them a smart choice for buyers who expect to move or refinance within a few years.
Key Features
Lower Initial Interest Rates
ARMs start with lower rate than fixed-rate mortgages, offering savings upfront.
Adjustment Periods
Interest rates are fixed for an initial period, then adjust periodically based on market conditions.
Interest Rate Caps
ARMs include rate caps, limiting how much the rate can increase at each adjustment and over the life of the loan.
Index and Margin
Rates adjust based on a market index plus a margin, offering transparency in how adjustments are calculated.
Benefits
Upfront Savings
ARMs typically start with lower interest rate than fixed-rate mortgages, leading to lower monthly payments in the early years of the loan.
Rate Flexibility
The interest rate on an ARM adjusts periodically, which can benefit borrowers if rates decrease over time.
Potential to Save on Interest
For those planning to move or refinance within a few years, the lower initial rate of an ARM can result in significant interest savings than a fixed-rate.
Variety of Adjustment Terms
ARMs come with different adjustment terms, allowing borrowers to choose how frequently their rate will adjust, providing flexibility based on their financial.
Related Questions
How does the ARM process work?
After you’re pre-approved, you apply for the ARM once you select a home. The lender then reviews your documents, orders an appraisal, and prepares everything for closing. During this process, you’ll also learn when and how your rate can adjust in the future.
What documents are needed for an ARM?
The documents needed for an ARM are the same as for other loan types: proof of income, bank statements, tax returns, and ID. If you are self-employed, you may need extra paperwork to show consistent income.
What is an adjustable rate mortgage (ARM)?
An adjustable-rate mortgage (ARM) starts with a lower fixed interest rate for an initial period, then adjusts periodically based on market conditions. This can give you lower initial payments, but your payments may increase later. ARMs work well if you plan to move or refinance before the adjustment period.
Who is eligible for an adjustable rate mortgage?
Eligibility for an adjustable rate mortgage depends on your credit, income, and debt-to-income ratio. Because payments can rise in the future, lenders may also review your financial stability more closely. Borrowers who qualify often have steady income and a good credit history.
Will I need an appraisal for an ARM?
Yes. For an adjustable-rate mortgage (ARM), an appraisal is almost always required to confirm the home’s value. This helps ensure the lender is not lending more than the property is worth, and it’s the same process as with most other loan types.
Homes & Families
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