ARM Loans

ARM, or “Adjustable Rate Mortgage,” loans are just like they sound: unlike fixed-rate loans, the interest rate of the oustanding balance can change over the course of the loan. ARMs are typically expressed as two numbers, where the first number represents the period of time the rate will be fixed, followed by either how many years the rate will float or how frequently the rate may change. For example, a 5/1 ARM would have a fixed rate for the first 5 years, followed by a rate that adjusts every year. The benefits of an ARM loan are tied to the borrowers particular strategy with the property in question, and the likelihood of unexpected adjustments to the property’s timeline.