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An ARM is an Adjustable Rate Mortgage. Unlike fixed rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on an ARM will change periodically. The initial interest rate of an ARM is lower than that of a fixed rate mortgage, consequently, an ARM maybe a good option to consider if you plan to own your home for only a few years; you expect an increase in future earnings; or, the prevailing interest rate for a fixed mortgage is too high.
We're here to make it a whole lot easier, with tools and expertise that will help guide you along the way, starting with our FREE Adjustable Rate Mortgage Qualifier.
We'll help you clearly see differences between loan programs, allowing you to choose the right one for you whether you're a first-time home buyer or a seasoned investor.
Here's how our home loan process works:
Most homeowners get into adjustable-rate mortgages for the lower initial payment, and then usually refinance the loan when the fixed period ends. At that time, the interest rate becomes variable, or adjustable, and the homeowner would likely refinance into another ARM, something fixed, or sell the home outright.
An adjustable-rate mortgage starts with a fixed interest rate for an initial period, after which the rate adjusts periodically based on market conditions. This differs from fixed-rate loans, where the interest rate remains unchanged for the entire term.
Introductory rates are the lower, fixed interest rates offered at the beginning of an ARM. Depending on the loan structure, this period can last several years before the rate begins to adjust according to market indexes.
After the initial fixed period ends, the interest rate adjusts at scheduled intervals. The new rate is typically based on a financial index plus a margin, which may increase or decrease your monthly payment.
Yes, most adjustable-rate mortgages include rate caps that limit how much the interest rate can increase per adjustment period and over the life of the loan. These caps help provide a level of protection against significant payment changes.
The ARM process includes selecting the right loan structure, completing an application, undergoing financial review, receiving approval, and closing. Galaxy Lending Group helps guide borrowers through each stage while explaining how rate adjustments may impact future payments.
Mortgage rates change every day, and your rate will vary based on your location, finances, and other factors. Get your FREE customized rate comparison below:
