Adjustable Rate Mortgage Loans (ARM)
Adjustable-Rate Mortgages in Durango & Southwest Colorado
Benefits of Adjustable Rate Mortgage Loans (ARM)Â Â
- Often a lower starting rate than a comparable fixed-rate loan
- A fixed rate for an initial period of several years before it can adjust
- A good fit if you plan to sell or refinance within a set time frame
- Rate caps limit how much your rate can change
If you plan to sell or refinance within a few years, an adjustable-rate mortgage may be worth a look. An ARM has a rate that is fixed for an initial period and then adjusts at set intervals, so your payment can go up or down after that. Plan on being able to afford a higher payment rather than counting on future raises or rising home values.
Is an Adjustable-Rate Mortgage Right for You?
ARMs make the most sense when you have a clear timeline: a job transfer, a starter home you expect to outgrow, or a plan to refinance. In Durango, they are also common on jumbo loans, where the starting-rate difference can matter more. Peter will show you the starting payment and the highest payment the caps allow, so there are no surprises.
How an ARM adjusts
After the initial fixed period, your rate resets based on a published index plus a set margin. Caps limit how much the rate can rise at the first adjustment, at each adjustment after that, and over the life of the loan.
Adjustable-Rate Mortgage Questions
Who is an ARM a good fit for?
Borrowers who expect to sell or refinance before the initial fixed period ends, and who could still afford the payment if the rate adjusts upward.
Can my payment go down after the fixed period?
Yes. If the index falls, your rate and payment can go down at an adjustment, subject to any floor in your loan terms. They can also go up.
Can I refinance out of an ARM later?
Usually, yes. Many borrowers refinance into a fixed-rate mortgage before the first adjustment. That depends on your credit, income and home value at the time, so it isn’t guaranteed.
Where can I learn more about ARMs?
The Consumer Financial Protection Bureau publishes a plain-language guide, the CFPB home buying resources, including its booklet on adjustable-rate mortgages. Peter is happy to walk through it with you.