ARMs – Adjustable Rate Mortgages and Loans in Green Bay, WI
Is an Adjustable Rate Mortgage right for you? It might be!
What is an adjustable rate mortgage (ARM Loan)?
Let’s start from the beginning: what exactly is an adjustable rate mortgage or ARM? An ARM is a home loan just like any other home loan, however, the interest can change over time. So this means that your mortgage payments can increase. They could also decrease, it would depend on what the current rate is. Initially, the interest rate on an adjustable rate mortgage is fixed, but only for a certain period of time. After that time passes, it will typically fluctuate every year as the interest rates fluctuate. The most common ARMs are 1 year, 3 year, 5, year, 7 year, and 10 year.
How to read an adjustable rate mortgage (ARM)
Typically, you’ll see ARM loans in a fraction form, and what that is really telling you are two different numbers. The first number tells you how long the loan initial fixed rate is for. The second number tells you how often the interest rate will adjust after the initial time period is over. Let’s take a 5/1 ARM: 5 years for the initial fixed interest rate, then after that every year the rate will adjust to current market variables.
Is there a limit on how high the adjusted rates of the mortgage can rise?
Yes! In MOST cases ARMs come with a rate cap. There can be periodic cap rates or lifetime cap rates. When you apply for an ARM your lender will guide you through all the details of interest rates and of the cap rates – this will be provided to in your mortgage loan documentation.
To learn more about adjustable rate mortgages and if they are the right kind of home loan for you, contact Executive Mortgage!
Consultation on the Current ARM Mortgage Loan Products
To learn more about adjustable rate mortgages (ARM loans) and if they are the right kind of home loan for you, contact Executive Mortgage in Wisconsin. Learn about all the benefits, drawbacks, and current rates. Our loan officers would be more than happy to set up a consultation! Call 920.490.8823 or fill out our short application form to get started.