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 Adjustable Rate Mortgages otherwise known as ARMs, are great for people who are looking to lower their monthly payment, and for people who know they won't be in their home for a long period of time. That's because ARMs most often carry lower interest rates during the initial years of the loan. Here's how they work: the rate that you lock in on, also known as the start rate, will be fixed for a period of time, most commonly 3, 5, 7, and 10 years. After this fixed period is up, the rate will adjust by adding a current index (most often the 1 year US Treasury, or the 1 Year LIBOR) to a margin, (commonly 2.750%). Adding the index and margin will give the loan a new rate for a new period of time, most commonly one year. After this period, the rate will adjust again using the same formula. Adjustable rate mortgages do have caps on them in terms of how high the rate can move. To the first time homebuyer an adjustable rate mortgage may sound intimidating however they are very common and can save borrowers can save a lot of money if they don't plan on owning their house for a long period of time. ARMs can either be conforming or jumbo loans. (Link to Conforming/Jumbo section) Contact one of our consultants to find out more.
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| 3/1 ARM |
5.375% |
| 5/1 ARM |
5.5% |
| 15 Year Fixed |
5.5% |
| 30 Year Fixed |
6.375% |
| 3/1 ARM |
5.375% |
| 5/1 ARM |
5.5% |
| 15 Year Fixed |
5.75% |
| 30 Year Fixed |
6.875% |
 | 7/01/08 6:13pm |
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