ARMs are great for homebuyers who plan to trade up in future years because interest rates generally begin lower than fixed rate mortgages.
An Adjustable Rate Mortgage (ARM) features a variable interest rate, which is periodically adjusted, based on the change in a financial index, plus a margin that is established at origination. Interest rate changes are limited or capped at each adjustment and for the life of the loan. ARMs may provide the security, flexibility and affordability prospective home buyers desire.
5/1, 5/5, 7/1 and 10/1 adjustable rate mortgages for conforming and jumbo loan amounts.
Each ARM product has their own index, margin, and caps.
The initial interest rate is fixed for a certain period.