Adjustable Rate Mortgages
- Interest rates and payments often fixed for first years of loan
- Initial interest rates often lower than fixed-rate mortgages
- Interest rates and payments can change
- Most home loan types are eligible
30-Year, Fixed-Rate Mortgages
- Payments often lower than 15-year, fixed-rate mortgages
- Interest rates often higher than 15-year, fixed-rate mortgages
- Interest payments don’t change
- All home loan types are eligible
15-Year, Fixed-Rate Mortgages
- Payments often higher than 30-year, fixed-rate mortgages
- Interest rates often lower than 30-year, fixed-rate mortgages
- Interest payments don’t change
- All home loan types are eligible
5/1 Adjustable Rate Mortgages
A common type of adjustable-rate mortgage is the 5/1 ARM. With this loan, your interest rate and payment stay the same for the first five years of the mortgage. After five years, your interest rate can change once a year. Your interest payment might increase or decrease as a result.
Mortgage Payment Calculator
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Cash Out Refinance Calculator
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Down Payment Calculator
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Check the Rates
Compare the starting interest rates on an adjustable-rate mortgage to a fixed-rate mortgage. The initial rates on adjustable-rate mortgages are often lower than fixed-rate mortgages but can increase over time.
Understand the Terms
Make sure you know how, when, and by how much your interest rate might adjust. Adjustable-rate loans can have caps on how much your rate can rise in one year, as well as caps on how much your rate can rise in total over the life of the loan.
Apply for a Loan
If you decide an adjustable-rate mortgage is right for you, you’ll need to fill out an application and meet our credit, income, and financial standards to get approved. If you’re approved, you’ll need to attend closing and pay closing costs.
Look for Adjustments
After the initial rate period is over, we will begin adjusting your mortgage according to the terms of the loan. You’ll receive notices of how and when your rate may adjust, and what your new monthly interest payment might be.
Adjustable-Rate Mortgage Loans FAQs
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You’ll need to complete an application, provide documents, and meet our credit, income, and financial standards to get approved for an adjustable-rate mortgage. We may also consider your ability to afford the maximum payment increase when we review your application.
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One popular type of adjustable-rate mortgage is a hybrid ARM. These are mortgages where the interest rate stays fixed for the first years of the loan and then adjusts once a year. For example, a 5/1 ARM is a mortgage where the interest rate is fixed for the first five years and then adjusts once a year.
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An adjustable-rate mortgage may be right for you when you are confident you can afford the rate and payment increases that can come with them. In return, you can often enjoy a lower initial interest rate and the possibility that your ARM may adjust to a lower rate in some years rather than a higher one.
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Freedom Mortgage can make buying or refinancing a home with an adjustable-rate loan simpler. To apply with us, call 877-220-5533 and speak with an experienced loan advisor. You can also get started by filling out this online form.