Mortgages for purchase or refi.

ACU ARM Loans

What are Adjustable Rate Mortgages

Often referred to as an “ARM,” an adjustable rate mortgage is a type of home loan structured to change with prevailing interest and market conditions over time. These types of home loans typically start with a fixed mortgage rate during the introductory period. Once that time expires, an adjustable rate mortgage fluctuates on a monthly or yearly basis.

Allegiance has a 5/5 ARM option. This offers a five-year introductory period at a low-interest rate. After the five years expires, the mortgage rate is recalculated every 5 years for the remainder of the loan. Thus, “5” years of fixed rates, followed by changes every “5” years. 

It’s also important to understand that an adjustable rate mortgage has a wide range of uses. These types of mortgage loans can be used to purchase investment property or land, refinance a mortgage, as well as buy a single-family house.

When to Use Adjustable Rate Mortgages

Selecting an adjustable rate mortgage provides borrowers with significant benefits, under the right circumstances. These types of mortgage loans generally start with attractively low interest rates, favorable terms, and offer easy online applications.

If You Plan to Relocate

An adjustable rate mortgage tends to be an excellent choice for people who expect to relocate. The low mortgage rate during the introductory period reduces monthly expenses. Securing this type of home loan positions families to sell the property before the mortgage rate changes. 

Rising Interest Rates

It’s difficult to predict whether overall interest rate will rise or fall in the coming years. That’s why the introductory fixed mortgage rate during the initial years is so important. Borrowers have an opportunity to decide whether to stick with the adjustable rate mortgage or refinance if they believe interest will rise.

Contact one of our Mortgage Loan Officers today to discuss in more detail or continue reading Is an Adjustable-Rate Mortgage Right For You? blog post.