Adjustable rate mortgage loans title

Adjustable Rate Mortgage Loans

An adjustable rate mortgage loan has an interest rate that will change over the life of the loan. Typically, the interest rate is lower than a fixed rate in the first few years. The low rate period can be from 1 to 5 years. The rate will start to adjust every year based upon market conditions and the terms of the loan. There are rate caps that are stepped from one year to the next with stipulations such as the maximum increase or decrease when the rate changes. The is a second type of cap that specifies the maximum allowable rate over the life of the loan.


Benefits of a adjustable rate mortgage loan

  • Low initial interest rates
  • Can be more affordable for you because the rates can be lower in the early periods of the loan
  • During the first years of the loan, the payments are fixed.
  • The lower initial interest rates lower your mortgage costs, giving you more disposable income than a fixed rate mortgage loan.

Consider an adjustable rate mortgage when:

  • You are planning on moving out of the home in under 5 years (depending on the term of your ARM, your loan payments will start to increase after the lower fixed rates in the beginning of the mortgage).
  • You are comfortable with the fact that your payments in the future are unknown and could have the potential to be much higher than the initial period.

What is the next step?

America’s Lending Partners’ free loan request service will match you with up to four lenders to help you lower your interest rate.

Good Luck!


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