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Adjustable-Rate Mortgage Definition
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How Does An Adjustable-Rate Mortgage Work?
With an adjustable-rate mortgage (ARM), you can lock in a lower interest rate for the following seven years.
Different Types Of ARM Loans
With an adjustable-rate mortgage (ARM), you can lock in a lower interest rate for the following seven years.
How To Qualify For An ARM Loan
With over a decade of experience in the fields of real estate, personal loans, mortgages, and personal finance, Miranda Crace is a Senior Section Editor at the Rocket Companies. Miranda is committed to increasing financial literacy and giving people the tools they need to reach their financial and home ownership objectives. After completing her studies in PR writing, film production, and film editing at Wayne State University, she graduated. Her contributions to the well-liked video series “Home Lore” and “The Red Desk,” which were shortlisted for the coveted Shorty Awards, are a testament to her creative abilities. In her free time, Miranda likes to travel, participates actively in the community of entrepreneurs, and appreciates a well-brewed cup of coffee.
FAQ
How does ARM loan work?
Interest-only adjustable-rate mortgages, or ARMs, require the borrower to pay only interest for a predetermined amount of time—no principal. After the interest-only period expires, the borrower begins to make payments for both principal and interest in full. The interest-only period could be several months or several years long.
Is an ARM loan ever a good idea?
Consider an ARM if you: Have plans to sell your house in a few years Consider that interest rates will eventually drop significantly.
What does ARM mean in a loan?
An ARM is an Adjustable Rate Mortgage. The interest rate on an adjustable rate mortgage (ARM) will fluctuate over time, in contrast to fixed rate mortgages, which have an interest rate that stays constant for the term of the loan.
What is an example of an ARM loan?
For instance, in a 5/6m ARM, your rate is fixed for the first five years. After that, until the loan is repaid, the rate may change every six months (the 6m in the 5/6m example). This period between rate changes is called the adjustment period. Adjustment periods can vary.
Read More :
https://www.rocketmortgage.com/learn/adjustable-rate-mortgage
https://www.investopedia.com/terms/a/arm.asp