Adjustable Rate Mortgages (ARMs)
An Adjustable Rate Mortgage is 30- or 40-year mortgage with a short-term fixed rate period in the beginning. Your rate remains fixed during the first few years of your loan, as does your payment amount. After the initial fixed rate period is over, the rate could adjust annually.
Benefits of an adjustable rate mortgage:
- low monthly payments
- greater purchasing power
- stability of a fixed rate mortgage
If you anticipate your income will be increasing in the future or if you plan on staying in your home for seven years or less, an Adjustable Rate Mortgage (ARM) may be a great option for you.
| |
30-Year Mortgage |
40-Year Mortgage |
| Availability |
6-month, 1-year, 3-year, 5-year, 7-year fixed rate |
1-year, 3-year, and 5-year fixed rate |
| Pre-payment penalty |
N/A |
N/A |
| Options |
No Cost
Interest Only
|
Interest Only |
| Property limitations |
California properties: primary residences, second or vacation homes, and investment properties |
No condos, second or vacation homes, or investment properties, California properties only |
| Conforming rate discount* |
On loans up to $729,750
(available on 6-month, 1-year, 3-year, 5-year, ARMs) |
N/A |
- Based on LIBOR index (London InterBank Offered Rate). Periodic Adjustment Cap of 1% for 6-month ARMs, 2% for the rest. Lifetime Adjustment Cap of 5.75%.
- For mortgage loans on properties outside of California, try Home Loan Headquarters.
*Conforming rate discounts available on loan amounts up to $729,750 on single-family residences in California counties that qualify for higher conforming limits. Some restrictions apply. Conforming rate discount program not available on condos. Rate/monthly payment example assumptions: no points, 80% loan-to-value (LTV)/20% down payment, single family residence (non-condo) in California only. Rates as of 06/01/2008.
More about the options:
No Cost Loans
A "No Cost" version of this loan would require no lender closing costs to establish the loan.
Interest Only
An Interest Only, Adjustable Rate Mortgage with an interest-only period during the fixed rate term. This loan offers lower payments, and without negative amortization. After the initial fixed rate period is over, the monthly payment changes to include both the principal and interest due. With an Interest Only loan, you may qualify for a higher loan amount, and still have extra cash to invest or pay bills.
Rates and terms subject to change without notice. Additional conditions may apply. *Conforming rate discount available on properties located in Santa Clara, San Mateo, Alameda, Contra Costa, Santa Cruz, and San Francisco counties.