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  • I Advice - Mortgage Loans 101 - The Adjustable Rate Mortgage

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    lming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This init
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    Adjustable rate mortgages, rather than fixed-rate mortgages, may be confusing for many homebuyers who are not familiar with them. It is always a good idea for a homebuyer to have all the information needed to make an informed decision.

    The adjustable rate mortgage (ARM) is popular with home buyers looking for a lower interest rate for the first few years of ownership. Why are they popular? Simply put, they are structured to help people have lower payments for the initial period of the loan (the fixed-rate portion of the loan).

    How an ARM Works
    The overwhelming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This initi

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    ood idea for a homebuyer to have all the information needed to make an informed decision.

    The adjustable rate mortgage (ARM) is popular with home buyers looking for a lower interest rate for the first few years of ownership. Why are they popular? Simply put, they are structured to help people have lower payments for the initial period of the loan (the fixed-rate portion of the loan).

    How an ARM Works
    The overwhelming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This init

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    home buyers looking for a lower interest rate for the first few years of ownership. Why are they popular? Simply put, they are structured to help people have lower payments for the initial period of the loan (the fixed-rate portion of the loan).

    How an ARM Works
    The overwhelming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This init

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    people have lower payments for the initial period of the loan (the fixed-rate portion of the loan).

    How an ARM Works
    The overwhelming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This init

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    lming majority of adjustable rate mortgages are 30-year mortgages. For the “ARM” portion of the mortgage, you pay a fixed interest rate. This initial period is usually 3, 5 or 7 years, but can vary based on the lender.

    For the first 3, 5 or 7 years (or whatever the term is) you will have a defined interest rate and you will know what your payments are each month. This is the key principle of the ARM loan -- a lower interest rate for the initial period (lower than what a 30-year fixed rate mortgage would be). This helps many first-time home buyers purchase a home in the first place.

    When the ARM Adjusts
    After the ARM period ends, the loan becomes an adjustable rate. A formula (defined by your lender)

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