An ARM starts with a rate that is significantly lower than its fixed rate counterpart. The ARM’s rate stays fixed for a set period of time (5 to 7 years), but then adjusts yearly thereafter, upward or downward, to reflect overall mortgage rates. Maximum increase caps are in place to protect borrowers from potentially wild rate increase swings.
- Lower monthly payments (compared to fixed rate loans) for the chosen term (5 or 7 years)
- No rate increases if you move (or refinance) during that initial term
- Lower monthly payment means you may qualify for a larger loan
How can you know for sure if an ARM is right for you? Contact a LMCU mortgage pro at (800) 242-9790 ex.9912 for a full, free analysis of your situation.