Current Adjustable Rate Mortgage Rates
Review current adjustable rate mortgage rates for December 11, 2018. The table below enables you to compare adjustable rate mortgage rates for leading lenders near you. The table shows five, seven and ten year ARM mortgage rates and closing costs. These are also called 5/1, 7/1 and 10/1 ARMs because your mortgage rate and monthly payment are fixed for the first five, seven and ten years and then subject to adjust annually for the remainder of the loan.
The starting interest rate and monthly payment for an adjustable rate mortgage are usually lower than the for a fixed rate loan but the rate and payment for an ARM can potentially increase so there is more risk for borrowers. ARM mortgage rates vary based on several factors including the length of time the initial rate applies, with the shorter the time period, the lower the rate.
Use the table below to compare the mortgage rate, APR, closing fees and monthly payment for different ARM programs and lenders. You can refine your search to review updated ARM mortgage rates based on your specific inputs for loan amount and other factors. You can also adjust the Loan Type and Term selection to compare adjustable rate and fixed rate mortgages side-by-side. We recommend that you contact at least five lenders to find the best loan terms and determine if an ARM is the right home loan financing option for you.
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Why Select an Adjustable Rate Mortgage
Lower Initial Rate.
Adjustable rate mortgage rates are typically lower than the interest rate on a 30 year fixed rate mortgage, at least initially. Borrowers benefit from the lower ARM mortgage rate, sometimes called a “teaser” rate, for the first 3, 5, 7 or 10 years of the loan, depending on what type of ARM you select. After this initial period, which is also called the fixed rate period, the interest rate is subject to change and possibly increase.
Lower Monthly Payment.
Lower adjustable rate mortgage rates mean a lower monthly payment for borrowers. A lower monthly mortgage payment provides additional financial flexibility for borrowers and makes owning a home more affordable, at least during the initial fixed rate period of the loan. The flip side of an adjustable rate mortgage is that your monthly payment can potentially increase in the future if interest rates go up. Borrowers need to make sure that they can afford their monthly payment both at the beginning of the mortgage, when the interest rate is lower, and over time if their payment goes up.
Larger Mortgage Amount.
The initial teaser ARM mortgage rate and monthly payment enable borrowers to afford a larger mortgage amount and potentially buy more home. Being able to qualify for a larger mortgage amount is one of the main attractions of an adjustable rate mortgage. The downside of being able to afford a larger loan amount with an adjustable rate mortgage is that you lose the certainty that comes with a fixed rate mortgage, where the interest rate remains the same over the life of the mortgage.
You Think Interest Rates Will Go Down.
The interest rate for an adjustable rate mortgage is subject to change after a fixed period of time, usually the first 3, 5, 7 or 10 years of the mortgage. The period of the loan when the interest rate can change is called the adjustable rate period and lasts until the end of the loan term, which is usually 30 years. If you think interest rates will decline in the future then an adjustable rate mortgage may be a good option. Because if interest rates go down during the adjustable rate period of your loan, your monthly payment will decrease which is great for borrowers. Please note that predicting interest rates is highly challenging so this approach can expose you to significant risk.
You Are Going to Own Your Home For a Relatively Short Period of Time.
An ARM is a good option if you are confident you are going to sell your home before the loan enters its adjustable rate phase. Borrowers who know they are only going to own their home for a set period of time are able to take advantage of the lower initial ARM interest rate, without being exposed to the risk that their rate and monthly payment increase in the future. For example, if you know you are going to own your home for less than five years then a 5/1 ARM may make sense, or possibly a 7/1 ARM if you want to be on the safe side. In this scenario, as long as you sell your home within five years you benefit from having a lower monthly payment relative to a fixed rate loan but you eliminate the risk of future payment shock because you payoff the mortgage before the ARM can adjust.
You are Comfortable With Risk.
Borrowers who select an adjustable rate mortgage should have a higher appetite for risk. Even if you have every intention to sell your home and payoff your loan long before an ARM adjusts and your monthly payment potentially increases, things do not always go as planned. Your personal circumstances may change or you may not be able to sell your home. Before you select an adjustable rate mortgage you should fully understand how the loan works including your maximum potential interest rate and monthly payment. Borrower who prefer certainty and peach of mind should probably avoid ARMs while borrowers with a higher risk tolerance may find them to be a more appealing mortgage option.
Why Borrowers Compare Adjustable Rate Mortgage Rates on FREEandCLEAR
Comparing adjustable rate mortgage rates can save you thousands. Use our rate tables to find the lender offering the lowest rates and fees
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More FREEandCLEAR Mortgage Resources
Use our Adjustable Rate Mortgage Calculator to calculate the initial monthly payment and worst case scenario for an ARM based on today’s interest rates
Understand the ins and outs of an adjustable rate mortgage (ARM) including key loan terminology and how they work
Adjustable rate mortgages involve more risk than other types of mortgages. Be sure to understand the downsides of an ARM so you can make an informed decision when you select your mortgage
Got a question about an adjustable rate mortgage (or any mortgage topic)? Ask the FREEandCLEAR Mortgage Expert and receive an informative response within 24 hours
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