Adjustable Mortgage Basics (ARMs)
So what are the basics of Adjustable Mortgages? The simplest definition is that your interest rate will change, or adjust, during the term of the loan. The adjustments will either lower or higher the monthly payment typically every 6 or 12 months. Borrowers considering this option should note that certain ARMs adjust as frequently as once a month. Always read the fine print before signing by the X. Fortunately, ARMs are not subjected to the arbitrary whims of the lender; they (the rates) are attached to a specific index over which the lender has no direct influence. The life term of an ARM has two distinctions: First, the interest rate is fixed for a determined amount of time anywhere from one month to 10 years. Second, after the initial period of fixed interest, the rate will adjust in accordance to the specified index to which the interest rate is tied. To increase the attractiveness of this option, provisions within the loan are established to prevent the interest rate from adjusting more (or less) than 1 to 5% from the previous rate. This is a contractual cap that will vary between lenders and their agreements. The term of...
To view and download this full PLR article, you must be logged in. Registration is completely free. Once you create your account, you will be able to browse, search & downlod from our PLR articles database of over "1,57,897+" on 1,000's of niches and 200+ categories without paying a penny. Click here to signup...
