What's an Adjustable-Rate Mortgage?
An adjustable-rate mortgage (ARM) is a loan program with interest rates that can change multiple times over the life of the loan. The interest rates for most ARM programs are fixed for a certain period and then can adjust once a year following the fixed period. The most common ARM options are 5/1 or 7/1 ARM programs, which are fixed for the first 5 or 7 years respectively.
Adjustable-Rate Mortgage Highlights
- Lower initial interest rates and monthly payments
- Rates and Payments may decrease based on the index rate
- Borrower may qualify for higher loan amounts