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What is an Adjustable Rate Mortgage, ARM, and who can benefit from it
What is an Adjustable Rate Mortgage (ARM) and who can benefit from it?  
Adjustable Rate Mortgages (ARM) 1-Year ARM, Caps of 2/6?
An Adjustable Rate Mortgage is a mortgage loan in which
·         The interest rate adjusts periodically according to a predetermined index and margin.
·         The adjustment of the interest rate results in the mortgage payment either increasing or decreasing.
·         Periodic adjustments to the interest rate can occur every six months, every year or in multiple years.
·         ARMs typically have a lower initial interest rate vs. fixed.
·         There are ARMs that have fixed periods for 3, 5, 7 or even 10 years before the interest rate starts adjusting (Hybrid ARM)
ARM Terminology

  Initial Rate The rate at which an ARM program begins is called the initial rate. The initial rate and payment amount on an ARM will remain in effect for a limited period of time. The initial rate can range from 1 month to 5 years or more.

 
Adjustment Period The interest rate and monthly payment change every month, three months, six months, 1 year, 3 years, 5 years or 7 years or so. The ... more

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