The interest rate on an adjustable-rate mortgage (ARM) can change at the specified intervals following an initial "fixed" period. For example, a 5/6-month ARM interest rate is fixed for five years and then can adjust at the end of the initial 5 year term and every six months after that for the remaining term of the loan. We offer a wide variety of ARMs to fit your unique needs, including 5/6-month, 7/6-month and 10/6-month ARMs.
ARMs generally have the lowest possible mortgage rate. In fact, 7/6-month ARM rates may have significantly lower rates than a 30-year fixed rate mortgage. The 7/6-month ARM rate would be fixed for seven years, potentially saving you in interest expense that you could use, for example, to pay off credit card debt, or add to your retirement savings.
If you plan to sell your home before the loan adjusts, you may save money versus a fixed-rate loan. For example, if a job transfer is likely, an ARM would be a better solution than a higher rate, 30-year fixed-rate mortgage. The lower initial rate of an ARM can be a good strategy for mobile professionals, homeowners who plan to upsize or downsize, and anyone who will live in their home for the short term.
By applying for an ARM, you may qualify for a higher loan amount and can buy a more valuable house.