An adjustable rate mortgage (ARM) is a mortgage in which the interest rate may change over time.
With an adjustable rate mortgage, the interest rate may change periodically, usually in relation to an index (such as the London Interbank Offered Rate, or LIBOR), and payments may “adjust” up or down accordingly.
Unlike a fixed rate mortgage, homeowners with this type of home loan aren’t guaranteed the same interest rate for the duration of their loan. The risk of an increasing interest rate is something that borrowers should take into account when considering an adjustable rate mortgage for their home financing.
Great if you plan to live on the property for 10 years or less
Interest rate and monthly payment remain the same for 10 years
After 10 years, interest rate is adjusted annually
Great if you plan to live on the property for 7 years or less
Interest rate and monthly payment remain the same for 7 years
After 7 years, interest rate is adjusted annually
Great if you plan to live on the property for 5 years or less
Interest rate and monthly payment remain the same for 5 years
After 5 years, interest rate is adjusted annually
Great if you plan to live on the property for 3 years or less
Interest rate and monthly payment remain the same for 3 years
After 3 years, interest rate is adjusted annually