Loan Programs

The adjustable-rate mortgage (ARM) is a home loan with an interest rate that is fixed for a set amount of time, then resets and adjusts up or down periodically, per the terms of the loan. We offer ARMs that have a 5, 7, or 10 years fixed period. Remember, the longer the fixed period of the loan, the higher the rate (typically but NOT always). 

ARMs come with interest rate floors (lowest interest rate you can pay) and ceilings (highest or maximum rate you can pay), which are commonly referred to as ‘caps’. ARM caps protect both you and your lender. The floor protects lenders from losing money on loans if the index decreases dramatically. The ceiling marks the highest possible rate that the borrower can pay on a mortgage, which protects you from paying an outrageous rate if the index suddenly climbs. In order to protect lenders and borrowers from possible foreclosures in the future, the borrower must qualify for the highest possible payment. Some borrowers with higher debt-to-income (DTI) ratios may not be able to qualify for an ARM loan.

WHEN AN ARM MAKES SENSE TO YOU

• Adjustable-rate mortgages benefit the borrower at times when the interest rate is higher than in previous years and deemed likely to drop to a more affordable level in the near future. However, if rates are already low, you may want to consider a fixed-rate mortgage as your first option.

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• Adjustable-rate mortgages typically start out at a lower rate percentage than a fixed-rate mortgage. If you retire or pay off your mortgage quickly, the adjustable rate might not have time to adjust.

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• ARMs are great options if your job requires you to move frequently or if you plan to sell your house within a few years of purchase, rather than keeping it forever.

*All loans are subject to underwriting or investor approval. Other restrictions may apply. This is not an offer of credit or a commitment to lend. Guidelines subject to change.