<% String pageType = "About"; %> <% String subPageType = "Mortgage Library"; %> <%@ include file="includes/header.inc"%> Adjustable Rate Mortgages

An adjustable rate mortgage offers a lower initial interest rate and monthly payments than a conventional fixed-rate mortgage. After an initial term, the interest rate on an adjustable-rate mortgage loan is re-set periodically to keep the rate in line with current market interest rates.

For example, a 3/1 arm loan offers a fixed rate for the first three years. The interest rate adjusts once a year thereafter. 5/1, 7/1 or 10/1 arm loans offer a fixed rate for the first five, seven or ten years respectively, adjusting yearly thereafter. The lender sets the adjustable interest rate by adding a fixed percentage to an index rate. When the interest rate goes up, you monthly payment also increases.

Most ARM loans have a periodic rate cap and lifetime cap to limit the amount the interest rate can increase each adjustment period and over the term of the loan.

Discuss with your mortgage professional how an adjustable rate mortgage, with initial lower monthly payments, may be the solution to your financing needs.

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