Tag Archives: Adjustable Rate Mortgages (ARMS)

An Overview of Adjustable Rate Mortgages

FE_DA_0723Mortgage425x283To best serve its customers, AmeriSave makes a wide variety of different mortgage loan products available, including Adjustable Rate Mortgages (ARMs). An ARM ties interest rates to an economic index. As the index changes, the interest rates and payments will undergo periodic adjustment. Often, the initial rate will stay valid for a period of one, three, or five years and will then undergo adjustment on an annual basis. AmeriSave clearly outlines the stipulations of its ARMs to provide customers with all the tools necessary to make the best decision for their individual circumstances.

Many individuals choose an ARM despite the possibility of a rise in payment because initial rates often prove lower than those offered for fixed-rate loans. The decision depends heavily on how long an individual plans to stay in a home. If the borrowers will sell the home after only a few years, an ARM could save money.

AmeriSave clearly outlines the index that it will use to adjust the rates of an ARM, allowing potential borrowers to research the index’s performance in the past. Index becomes an extremely important factor in comparing two lenders. The other major factor, AmeriSave explains, is the margin, an interest rate that covers the lender’s underwriting costs and the profit made from the loan. The total interest rates represents the index added to the index rate.