Adjustable Rate Loans

Adjustable Rate Mortgages

Adjustable Rate Mortgages (ARMs), also known as variable rate mortgages, have interest rates that adjust over time based on market conditions. ARMs are hybrid loans that start off with a fixed rate for a specified number of years (usually 5, 7, or 10 yrs), after which, the interest rate is adjusted once per year depending on the loan terms. Generally, there are limits of how far up or down the interest rate can change. While ARMs are technically 30-year loans, due to the unpredictability of future mortgage rates, ARMs are most attractive to those planning on owning their home for a short period of time.

Key Benefits of Adjustable Rate

• ARM interest rates are usually lower than 30-year fixed rates.
• They can reduce your monthly payments significantly.
• Greater savings are achieved if interest rates decline.
• Caps on ARMs offer extra protection against volatile market conditions.
• ARMs are ideal if you plan to own your home for less than 10 years.

Fidresi Offers The Following ARMs:

• 5/1 ARM: Fixed rate for the first 5 years, then the interest rate adjusts once per year.
• 7/1 ARM: Fixed rate for the first 7 years, then the interest rate adjusts once per year.
• 10/1 ARM: Fixed rate for the first 10 years, then the interest rate adjusts once per year.

To minimize risk, our conventional ARMs come with a 2/2/5 cap:

• Initial Rate Cap - 2% maximum increase or decrease for the first rate adjustment.
• Periodic Rate Cap - 2% maximum increase or decrease for subsequent rate adjustments.
• Lifetime Cap - 5% maximum increase above the initial rate.