Adjustable Rate Mortgage.
Including 3/1 ARM, 5/1 ARM
or any other adjustment period

   The popularity of adjustable rate mortgages has increased with the rise in real estate values. In the late 80’s initial fixed rate period loans were introduced, which quickly became very popular.

   Choosing a 3, 5 or any other fixed rate period adjustable rate home loan is a simple decision based on your anticipated length of stay at the property. For instance young couples starting out will probably move up in 5 years or so, as their mortgage rate is about to increase.

   You can choose a program that is fixed for as long as 10 years and still save a substantial amount of interest compared to a fixed rate mortgage.

   A negative amortization loan sometimes referred to, as an option arm is a totally different calculation, which cannot be done on this page.  

How does an adjustable rate mortgage loan work?

You must first familiarize yourself with some terminology.

-Start Rate is the rate at which the initial payments are calculated.
-Index is a number derived from financial markets, which is a reflection of prevailing   interest rates.
-Margin is a polite way of saying profit margin.
-Adjustment Period is the period after which the mortgage loan will adjust. This for initial fixed rate period loans can be two different periods, initial and reoccurring.
-Adjustment Cap is the cap that is placed on any periodic adjustments.
-Life Cap is the maximum rate above which a rate may not rise.

An adjustable rate mortgage starts at an initial rate, sometimes referred to as the teaser rate, and stays fixed for a predetermined period say 1 or 3 years. After that period the lender will add the index with the margin and compare it with your start rate. If your start rate is lower than that number then your rate will be increased by the difference not exceeding your mortgage loan’s cap.