Adjustable-Rate Conventional Loan Packages
The ARM is a conventional home loan program in which the interest rate is fixed for a specified period of time. Starting at 5, 7, or 10 years, the initial fixed rate period will expire on these conventional packages. After that fixed rate expiration date, the rate will adjust according to market conditions.
This is favorable to home owners who plan on interest rates decreasing after the fixed-duration of the loan. This would automatically lower their monthly payments without the need to refinance.
On the flip side, however, the market conditions could increase your interest rate and force your mortgage payments to increase.
The general benefit to ARMs is a lower initial payment plan. Find out more information from our ARM – CHARM Booklet.