CENTURY 21
Landmark Properties
398 Main Street
Ridgefield, CT  06877
203-431-0000
203-438-5894 [FAX]
800-851-7321

Mortgages and Loan Programs

Adjustable Rate Mortgage (ARM)

[ 10/1 ARM ]  [ 7/1 ARM ]  [ 5/1 ARM ]  [ 3/1 ARM ]

An adjustable rate mortgage (ARM) means that the interest rate changes over the life of the loan - according to the terms specified in advance. With ARM’s:

• The initial interest rate is usually lower than with a fixed rate mortgage.
• The monthly repayment would also be lower.
• The interest rate may be adjusted (up or down) at predetermined times.
• The monthly payment will then increase or decrease.

Most ARM programs do offer “rate cap” protection, which limits the amount the rate can be increased, both each year and over the life of the loan.  All ARM’s are amortized over 30 years.

Advantages include lower costs - are usually priced lower than fixed rate mortgages so you can increase your buying power and lower your initial monthly payments.  If interest rates go down, you’ll enjoy lower payments.  Usually an ARM is the best choice for homeowners who plan to relocate (for example, with their company or the military), or for those who are purchasing their first home and plan to be in the property only for three to five years.  Remember that, on average, most people move or refinance within seven years.

Disadvantages include the possibility of increasing monthly payments if interest rates go up.  Keep in mind that ARM’s are best for homeowners who aren’t planning on staying with a property for a long period.  If you’re on a fixed income, an ARM (especially a short-term ARM) may not be your best choice.

[ Fixed Rate Mortgages ]