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ARMS

ARMS


What Is an Adjustable-Rate Mortgage (ARM)?

ARMS Home LoansAn adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. With an adjustable-rate mortgage, the initial interest rate is fixed for a period of time. After that, the interest rate resets periodically, at yearly or even monthly intervals.

ARMs are also called variable-rate mortgages or floating mortgages. The interest rate for ARMs is reset based on a benchmark or index, plus an additional spread called an ARM margin.

KEY TAKEAWAYS

  • An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied to the outstanding balance varies throughout the life of the loan.
  • Adjustable-rate mortgages generally have caps that limit how much the interest rate and/or payments can rise per year or over the lifetime of the loan.
  • An ARM can be a smart financial choice for home buyers who are planning keep the loan for a limited period of time and can afford any potential increases in their interest rate

Understanding an Adjustable-Rate Mortgage (ARM)

Typically an ARM is expressed as two numbers. In most cases, the first number indicates the length of time the fixed-rate is applied to the loan.

For example, a 2/28 ARM features a fixed rate for two years followed by a floating rate for the remaining 28 years. In comparison, a 5/1 ARM has a fixed rate for the first five years, followed by a variable rate that adjusts every year (as indicated by the number one after the slash). Likewise, a 5/5 ARM would start with a fixed rate for five years and then adjusts every five years.

Looking for a Mortgage Loan in Lake Norman / Mecklenburg area?

Mortgage Loan Options

1

USDA Loans

USDA loan is special type of a zero down payment mortgage that eligible homebuyers in rural and suburban areas can get through the USDA Loan Program

2

Conventional

Conventional loans to 95% loan-to-value (LTV) – not us. A 97% LTV is just one of the things that make Newrez’s conventional loans a better choice

3

Jumbo Loans

Big Jumbo loan gives your customers the ability to borrow more than the traditional loan amounts with a lower down payment requirement.

4

ARMS

An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.

5

VA Loans

The Federal Housing Administration and the Department of Veterans Affairs have increased loan limits - meaning you can now finance more

6

Refinance Loans

Refinancing is the replacement of an existing debt obligation with another debt obligation under different terms.