Adjustable Rate Mortgages
An adjustable mortgage is one whose interest rate, and consequently monthly payments, fluctuates over the period of the loan. With this type of mortgage, periodic adjustments based on changes in a defined index are made to the interest rate. ARM’s offer a small starting period which is fixed and once this initial period ends, the interest rate adjusts to the market. This comes at a risk since the rates are prone to fluctuate. One month’s payments may be higher or lower. With this risk the initial payments are typically lower.
They however have the potential to save you a respectable portion of money. ARM’s have something called a Rate Adjustment Cap. This is a limit to how high the rate can fluctuate. This is a protection set in place so that your monthly payment does not rise so high that you cannot pay.
If you have any further questions if this is the accurate option for you, we recommend you speak to one of our qualified representatives. Give us a call today at 718-274-1234.