Lower Initial Interest Rates
ARMs start with lower rate than fixed-rate mortgages, offering savings upfront.
Adjustment Periods
Interest rates are fixed for an initial period, then adjust periodically based on market conditions.
Interest Rate Caps
ARMs include rate caps, limiting how much the rate can increase at each adjustment and over the life of the loan.
Index and Margin
Rates adjust based on a market index plus a margin, offering transparency in how adjustments are calculated.
Upfront Savings
ARMs typically start with lower interest rate than fixed-rate mortgages, leading to lower monthly payments in the early years of the loan.
Rate Flexibility
The interest rate on an ARM adjusts periodically, which can benefit borrowers if rates decrease over time.
Potential to Save on Interest
For those planning to move or refinance within a few years, the lower initial rate of an ARM can result in significant interest savings than a fixed-rate.
Variety of Adjustment Terms
ARMs come with different adjustment terms, allowing borrowers to choose how frequently their rate will adjust, providing flexibility based on their financial.