The Adjustable Rate Mortgage

An Adjustable-Rate Mortgage (ARM) is a type of mortgage that has an interest rate applied to the outstanding balance that varies throughout the life of the loan. Whereas a fixed-rate mortgage has an interest rate that stays the same throughout the life of the loan. The ARM is ideal for those that either plan to pay off the loan within a specific period of time or will not be hurt financially if the interest rate adjusts higher. The ARM is an option for Conventional, FHA, and VA loans.

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Highlights & Benefits

Who It May Be Ideal For

Those not planning to live in their home for a long period of time

Equity Impact

May help to build equity faster

Flexible Home Choice

Available for all property types

Flexible Product Choice

The ARM is a possible option for a variety of products

More About The ARM

Some ARMs will have a specific interest for a period of time, such as 5 or 7 years, before switching to a floating (variable) rate for the remaining life of the loan. How often the rate changes is determined by the terms of the loan. The ARM’s variable interest rate is tied to a specific financial indicator (index). The option ARM is typically a 30-year adjustable-rate mortgage with a few different options for the monthly mortgage payment. Your ACM Loan Officer can help determine if an ARM is right for you and then work with you to make sure that you find the right ARM product for your needs.

Additional ARM Options

Finance homes in highly competitive real estate markets

ARM Loan Options

  • Hybrid ARMs

    Also known as a "fixed-period ARM" blends features of the fixed-rate mortgage and the ARM. It will have a fixed interest rate for an initial period of time and then switch to an ARM for the remaining period of the loan.

  • Option ARMs

    Also known as a Payment Option ARM, this is a monthly adjusting ARM that allows the borrower to choose between different monthly payment options. With so many options, it offers flexibility but typically requires careful planning that your Loan Officer can share with you.

  • Cash Flow ARMs / Option ARM

    A minimum payment option mortgage loan. This type of loan allows a borrower to choose their monthly payment from several options. These payment options usually include the option to pay at the 30-year level, 15-year level, interest-only level, and a minimum payment level.

  • Jumbo Loan

    Also known as a non-conforming mortgage is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). It’s classified as a non-conforming mortgage which means that it’s not eligible to be purchased, or securitized by Fannie Mae or Freddie Mac.

The simple interest rate can change after the initial fixed period, and more than one simple annual rate may apply over the term of the loan. At adjustment(s) an ARM’s rate is calculated by adding the associated market index to the loan program margin. Consult your loan officer for details on ARM offerings for your specific financial situation.

This is an advertisement and is not a commitment to lend. Contact lender to discuss the loan programs, payment and term options available specifically for you and your needs.

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