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Compared to fixed rate mortgages, Adjustable Rate Mortgages (ARMs) offer
a lower interest rate to start, so your monthly payments are
generally lower. But, the interest rate is adjusted at times,
based on an "index". Some of the more common indices include
United States Treasury Bills, California's 11th District Cost of
Funds and the London Interbank Offered Rate (LIBOR). Every lender
then adds a set margin to that index. The result - Your payments
could go up or down, depending on the economy and its resulting
indicators. The index used, the margin added, and how often your
rate is adjusted (usually every 1, 3, 5 or 7 years) can be
different from lender to lender. Be sure to ask what they are.
Look for ARMs with interest rate "caps". These limit how much
your rate can go up or down each time it is adjusted, and how much
it can go up or down over the life of the loan.
Consider an Adjustable Rate Mortgage
if you:
Want or need more home than you can qualify for now at a fixed
rate.
Are confident your income will increase.
Plan on moving within seven years of buying your home.
What else should you know about ARMs?
If the starting rate is very low compared to others, you're
probably getting a "discounted" rate. In that case, even if market
rates stay the same, your payments will go up when it's time to
adjust.
Many of our loan programs are available with adjustable rates
including FHA loans.
To find out more about our
Adjustable Rate Programs or to
Apply/Refinance:
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