Loan Programs
Adjustable Rate Mortgages
A lower rate for an initial fixed period, then adjustments on a set schedule. Whether that is smart or expensive comes down almost entirely to one question: how long are you actually keeping this loan.
Why This One
What an ARM Gives You
Lower initial rate
The introductory period typically prices below a comparable fixed rate loan.
More buying power early
A lower starting payment can change what you qualify for.
Fits a known short hold
If you are confident you sell or refinance inside the fixed period, you take the discount and leave before the risk starts.
Caps limit the movement
Adjustments are bounded per period and over the life of the loan.
In Plain English
Reading the Structure
An ARM is described by two numbers. A 5/1 is fixed for five years, then adjusts once a year after that. A 7/1 is fixed for seven. A 3/1 for three.
After the fixed period the rate resets to an index plus a fixed margin, subject to caps that limit how much it can move at each adjustment and across the life of the loan. Those caps are the part to read carefully, because they define your realistic worst case, and your worst case is the only number that matters when deciding whether you can carry this loan.
The Honest Part
Where an ARM Costs You
You are taking on rate risk to get a lower payment now. That is the whole trade, and it is a reasonable one if and only if your timeline is genuinely short.
The failure mode is predictable and common. Someone takes a 5/1 planning to move in four years, then life changes, they are still in the house at year six, and rates are higher. Now they are refinancing on someone else's schedule instead of their own, or carrying a payment they did not budget for.
Plans change more often than people expect when they sign. Before taking an ARM, run your budget against the fully-adjusted payment at the cap, not the introductory payment. If that number does not work, the discount is not worth it.
This is also a decision that should not be made in isolation from the rest of your finances, which is the whole reason we sit inside a firm that can see them.
FAQ
Frequently Asked Questions
Run Both Before You Decide
We will price the ARM and the fixed rate side by side and show you the crossover point, the month where the ARM stops being the cheaper choice. Then you decide.