ARM or Adjustable Rate Mortgage Loans in Kentucky

ARM or Adjustable Rate Mortgage Loans in Kentucky

Adjustable rate mortgage (ARM) Usually offers a lower initial

interest rate and lower interest payments than most fixed-rate

mortgages. However, payments will adjust up and down based

on a specific interest rate index (such as the LIBOR rate) plus

an additional amount, called a margin. These adjustments occur

at times specified in the loan documents and can result in significant

payment increases. Rate caps at each adjustment and over the life

of the mortgage may offer some protection against these increases

Reasons to choose an ARM

Lower initial interest payments.

If rates drop, payments may become lower

without refinancing.

Reasons not to choose an ARM

If rates increase, interest payments increase.

People who choose an ARM

Those who are confident they can continue to make

payments even if principal and interest amounts

increase significantly.

Those who believe rates will remain low or even

decrease and want to easily take advantage of lower

principal and interest payments.

Borrowers who plan to own the home for a limited time

and believe home values are steady or increasing.


Questions to Ask the Loan Officer About ARMs or Adjustable Rate Mortgage In Kentucky


How much higher can my payments go when

the mortgage first adjusts?

(Assuming today’s interest rate, but remember, the rate will

likely be different when your fixed period ends.)

After the first adjustment, exactly when,

and how often, does my rate and payment

amount adjust?

What’s the most my payment can increase?

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