Adjustable Rate Mortgages (ARM)

Adjustable-rate mortgages (ARMS) differ from traditional fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. ARM loans usually have caps that limit the rate from rising above a certain amount between adjustments (i.e. no more than 2 percent a year), as well as a ceiling on how much the rate can go up during the life of the loan (i.e .generally no more than 6 percent over the start rate). The low initial interest rates offered by ARMS make them attractive during periods when interest rates are high, or when homeowners only plan to stay in their home for a relatively short period. There are two types of arms, one has a six-month or one-year adjustment period, which means the interest rate and monthly payment is recalculated (based on the index) after the initial period. The second type has a fixed rate for a period of 3, 5 or even 7 years, and the interest rate and monthly payment is recalculated when the fixed period expires. Before deciding on an ARM, key factors to consider include how long you plan to own the property and how soon your monthly payment may change.

*All loans are subject to individual state laws, personal financial situations, subject to change and are not available in all areas, check with a Equity Mortgage™ loan officer for availability and restrictions.

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