Adjustable-Rate Mortgages
A lower fixed rate for the first several years, then a rate that can move. Often a smart fit if you plan to move or refinance before the fixed period ends.
An adjustable-rate mortgage, or ARM, starts with a fixed rate for an introductory stretch, commonly 5, 7, or 10 years. After that, the rate adjusts on a set schedule tied to a market index.
The trade is straightforward. You usually get a lower rate during the fixed period than a 30-year fixed would give you, in exchange for taking on rate changes later.
How the intro period works
A loan written as 7/6, for example, holds its rate fixed for the first seven years, then can adjust every six months after that. Rate caps limit how much it can move at each adjustment and over the life of the loan, so there's a ceiling on the change.
When an ARM makes sense
If you expect to sell or refinance before the fixed period ends, you can capture the lower intro rate and be gone before the first adjustment. If you plan to stay put for decades, a fixed rate usually buys you more certainty. Gene will map your likely timeline against both so the choice follows your plans, not a hunch.
A strong fit if…
- You expect to move or refinance within the fixed-rate window
- You want a lower rate during the early years of the loan
- You're comfortable with a rate that can change later
- Your plans point to a shorter stay in the home
Worth weighing
- After the intro period, the rate and payment can rise
- Rate caps limit the change but don't remove it
- A fixed rate may fit better if you plan to stay long term
Run your numbers
Compare other options
Is ARM the right fit for you?
Gene will look at your goals and compare your options with no obligation. Get pre-qualified or call to talk it through.