• Monthly payments are fixed for the initial fixed loan period
• Full documentation or Stated income documentation
• Payment can decrease if rates drop
• Qualify for higher loan amounts

Adjustable Rate Mortgages (ARMs) are ideal for individuals that plan to stay in their home for less than 7 years. By obtaining an adjustable mortgage you can qualify for a higher loan amount by initiating the loan with a lower interest rate.

With an adjustable mortgage there is a specified fixed period, an adjusting term and a life cap. An example of this would be a 5/1 ARM. This loan is fixed for the initial 5 years and than will adjust every year (designated by the 1) until the loan is paid off. A loan like this would also have 2 interest rates. The first rate would be 4.5% or the rate at which your loan is fixed for 5 years. The second rate would be something like 7.5% designating that your loan could never go above a 7.5% interest rate over the life of the loan.

Adjustable rates are good to obtain if:

• You are a first time home buyer
• You anticipate a higher income within a few years of buying your home
• Market interest rates are high
• You’re paying off other debt within a few years of owning your home
• You simply want the lowest possible payment