There are many types of adjustable rate mortgages. The most common are the 1, 3, 5 and 7 - year adjustable rate mortgages. If you think interest rates will remain relatively stable and expect your income to increase over the next few years, an ARM may be the right choice for you. The interest rate on these loans fluctuates periodically in response to changing market conditions. As interest rates fluctuate, your mortgage payment will be adjusted up or down. Your interest rate and payment may adjust at the end of the 1, 3, 5 or 7 year period. The shorter the fixed period is, the lower the interest rate will generally be. ARMs come with a maximum adjustment cap, so you have the security of knowing that your rate can never go above a certain level. Interest rates on ARMs are generally much lower than fixed interest rates. This lower rate and payment may enable you to qualify for a larger home loan. Call American Financial Resources to receive current rates and find out more information on these programs.
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