Adjustable Rate Mortgage (ARM)

An adjustable mortgage may be a good option to consider if you:

• - Think interest rates will fall in the future
• - Plan to stay in the home for only a short period of time
• - Expect future income growth

Features

• Your mortgage rate will rise and fall with the market interest rates. This means that your monthly principal and interest payments will change depending on the market interest rate at that time.
• A low mortgage rate is provided during the initial payment period. This allows for initial payments to be lower when compared to payments of a fixed-rate mortgage. Note that after the initial payment period has expired, your mortgage rate for the loan will fluctuate to the index rate. The lender adds the index rate to a margin to calculate your mortgage rate at each adjustment.
• This type of financing includes an interest rate cap that sets a limit on how high your mortgage rate can go. A cap limits the maximum amount your monthly payment will increase at each interest rate adjustment over the life of the loan.
• This type of loan is available in a variety of term options.

Take Into Consideration

When choosing the loan term, you should consider how the adjustable rate will affect you over time. Consider:

• Monthly payments may increase when the interest rate adjusts.
• Monthly payments may change every year after the initial fixed period is over.