Loan and Mortgage Options

Hybrid Adjustable Rate Mortgages (ARMs)

ARMs have an interest rate that may change periodically depending on changes to the corresponding financial index that is associated with the loan, an example would be LIBOR Index. When there is an increase in the index rate, your monthly payment will go up – when there is a decrease in the index rate your monthly payment will go down.

A Hybrid ARM loan features an initial fixed interest rate period, typically 3,5,7 or 10 years. After this introductory fixed period the interest rate becomes adjustable for the remainder of the loan term.

For example, in a 7/1 ARM, the rate will be fixed for 7 years and then become adjustable in the 8th year. The “1” means that the rate will adjust annually.

This type of a loan will be a good choice for you if:

  • You will be moving prior to the end of the fixed interest rate term. Typically the introductory rate is low so starting monthly payments will be low, however at the end of the  fixed interest rate term, the monthly payment will be based on the fully indexed rate which could result in a substantial increase in the monthly payment.
  • You expect your income to increase in future years
  • Want lower monthly payments at the beginning of the loan term


*Interest rates and APRs are based on current market rates and are for informational purposes only. Rates are subject to change without notice and may be subject to increase based on property type, loan amount, loan-to-value, credit score and other variables. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. Adjustable-rate mortgage (ARM) rates and payments assume no increase in the financial index after the initial fixed period of the loan. ARM rates and monthly payments are subject to increase after the initial fixed period. Please contact us for more information.


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