Lower payments, lower rates
Adjustable-Rate Mortgages
Ease into your home loan with an ARM
An adjustable-rate mortgage (ARM) is a variable-rate home loan with an interest rate that can vary over time based on the market. ARMs can be a great option if you are looking for a low monthly payment as you start out—they usually have a lower initial interest rate than fixed-rate mortgages.
ARM program benefits
- Easier qualification process
- Lower down payment requirements
- First-time homebuyer ARM options
ARMs compared to other mortgage options
Advantages
- Low initial interest rate
- Low initial monthly payments
- Budget flexibility
- Time to build a savings
- Option to refinance or sell before the adjustment period
Disadvantages
- Risk of increasing rates/payments after the initial fixed period
- Uncertainty about future rate adjustments
- Can be difficult to project your financial standing
Types of ARMs
Mountain America offers a variety of terms for adjustable-rate mortgages. Each of these options have a fixed interest rate for the first period (in years) of the loan, and a variable rate that adjusts once every six months for the remainder of the loan. These term options include:
- 5/6 ARM (fixed rate for five years, variable rate adjusting every six months)
- 7/6 ARM (fixed rate for seven years, variable rate adjusting every six months)
- 10/6 ARM (fixed rate for ten years, variable rate adjusting every six months)
Discover a flexible loan option
Low initial interest rates
Adjustment periods
Rate caps
Understanding adjustable-rate mortgages
ARM vs. fixed-rate mortgage
The main difference between an ARM and a fixed-rate mortgage is that an ARM may have a lower introductory interest rate during the fixed period of the loan. After that, your rate will become variable and can go up or down, which will impact your payments. A fixed-rate mortgage offers homebuyers more certainty. The interest rate and monthly payment will remain the same throughout the entire life of the loan.Choosing the right mortgage for you
If you prefer a predicable monthly payment and interest rate for the entire term of your loan, you will probably opt for a fixed-rate mortgage. If you move frequently or are purchasing a starter home, you may prefer to get an ARM loan. You will have the option of refinancing or selling your home before the fixed period is over and can enjoy a lower mortgage payment during your time there.ARM FAQs
How does an ARM work?
Unlike a conventional mortgage, an ARM is split into two parts—a fixed period, followed by an adjustable period.
- Fixed period—This initial period can be the first five, seven or ten years of the loan. Your interest rate will not change during this time.
- Adjustment period—During this period, your rate will fluctuate based on changes in the market.
Why choose an ARM?
If you move frequently or are purchasing a starter home, an ARM may be a great option for you. Frequent movers will likely sell the home before the fixed period is over, while first-time buyers could start with a lower mortgage payment and either sell or refinance later.
Making informed mortgage decisions
We are here to guide you forward with mortgage questions. Our experienced loan officers can help you make the best decision for your situation.
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