An adjustable-rate mortgage, or ARM, starts with an interest rate that stays fixed for an initial period. After that, the rate can change at scheduled intervals. An ARM may offer a lower starting rate than a comparable fixed-rate loan, depending on current pricing. Barren Hill Mortgage helps you compare the initial savings with the potential for future payment changes.

How an ARM Works

After the initial fixed period, your rate is calculated using an index plus a lender’s margin, subject to the loan’s adjustment limits. Your payment may rise or fall. The initial fixed period, adjustment frequency, and rate caps vary by loan. We’ll explain each of these before you make a decision.

When an ARM May Make Sense

An ARM may be worth considering if you expect to sell within the initial fixed period or can comfortably handle a higher future payment. Plans can change. Selling or refinancing before an adjustment is never guaranteed, so it’s important to understand the loan beyond its starting rate.

Look Beyond the First Payment

Let’s compare an ARM with a fixed-rate mortgage using your budget and expected timeline.