An adjustable rate mortgage, or ARM, offers a fixed rate for a period of time, most commonly 3, 5, 7, or 10 years. After the introductory period ends the interest rate for the loan will adjust up or down. This move depends upon the current rate of the loan's index plus the loan's set margin. The benefit is that the initial rate is generally lower than a comparable fixed rate loan (although this is not always the case).
There are many situations that warrant considering an adjustable rate mortgage. These include:
Adjustable rate mortgages do carry some risk. If you continue to hold the mortgage past the initial fixed rate period, it can adjust upwards. It is important to look at the adjustment frequency and the adjustment cap structure. The adjustment frequency is how often the ARM rate adjusts - generally annually. The cap structure dictates the amount the interest rate can increase - a common example is 5/2/5, meaning the first adjustment can be as high as 5%, subsequent adjustments can be as high as 2%, and the total adjustment over the life of the loan can be as high as 5%.
Your 1st State Veteran Mortgage Consultant will work closely with you to ensure you understand all the aspects of your mortgage loan, and that it will meet your goals. Call today at 1-833-838-7178 or APPLY HERE.
Growing up in a military family, I learned the values of selfless service, honor, respect and loyalty.
I carry those values into my job and passion today: Helping fellow military men and women get into homes.
My first mortgage was a VA mortgage and since retiring from the Army in ’91, I’ve helped put thousands of veterans in homes through the VA Mortgage Program.
Let our veteran help you today!
Thanks for your service, Jon!
-The team at 1st State Veteran Mortgage