The time between the rate changes of an adjustable rate mortgages are called adjustment periods. These periods can come in increments of one, three or five years, meaning that with the three year adjustable rate mortgage, the interest rate would be subject to change every three years. The risk with this sort of loan is minimalized by caps that work as “rate ceilings” to keep monthly payments from getting too high. Also, many adjustable rate mortgages can be converted into fixed rate mortgages if the home owner chooses.

An adjustable rate mortgage is easier to qualify for and may be available even to borrowers with damaged credit. Since the initial payments are generally lower, lenders are more likely to approve a larger loan. Also, if the current rates hold steady or drop any, a borrower with an adjustable rate mortgage may come out paying less for the loan than if he or she had a fixed rate mortgage.

If you have less than perfect credit an adjustable rate mortgage can often be easier to obtain. At a later time an adjustable rate can usually be locked in as a fixed rate loan for a one time cost. The interest rate of your loan depends greatly on the experience of your broker because they represent your interests to the lending institution backing your loan. To be contacted by a reputable broker licensed in your area please fill out our short application.

Adjustable rate mortgages, often referred to as ARMs, offer low introductory interest rates and are the perfect fit for home buyers who are not certain they will own the home for longer than 5-7 years. Apply online free to contact an adjustable rate mortgage expert.