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Adjustable Rate Mortgage

Filed Under mortgage 

The adjustable rate mortgage or ARM is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. The index could be for example the one year treasury, CD rates or even cost of funds as measured in a defined geographical area. Also referred to as the variable rate mortgage.

An adjustable rate mortgage or variable rate mortgage is a loan secured on a property whose interest rate and monthly repayment vary over time.

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Adjustable rate mortgages that have a fixed periods for 3, 5, 7, or 10 years are often called Hybrids. They adjust after the fixed period ends.

Hybrid programs are an excellent way to keep your payment lower if you plan to refinance or sell the home in just a few years.

The interest rate on ARM’s are made up of two components, the index and the margin. When choosing between different ARM programs, it is prudent to understand the volatility of the underlying indices as well as the margins.

An adjustable rate mortgage, also known as an ARM, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and your payments, are periodically adjusted up or down as the index changes. Ask a Mortgage Professional if an ARM is right for you?

Is your rate too high? Get a rate quote on a Denver Mortgage Loan now!

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