Intermediate ARMs
The most popular intermediate ARM loans are the 3/1, 5/1, 7/1 and
10/1. These loans are normally amortized over thirty years with
the interest rate initially fixed for three, five, seven and ten
years respectively. After the initial fixed period, these loans
typically adjust annually.
Intermediate ARMs are very popular with borrowers who want the
stability of a fixed rate and the benefit of a lower introductory
rate. If you plan to sell or refinance your home in three to ten
years, you may want to consider an intermediate ARM loan rather
than a fixed-rate mortgage. You can save money with the lower
introductory rate, but you risk having a higher rate if you are
still in your home when the introductory rate period expires and
the rate starts adjusting toward market levels. |
