Once the fixed-rate period expires, the ARM becomes prone to fluctuation. This is known as the reset. It can occur monthly, quarterly, annually, or over a set number of years. There are certain rate caps on ARMs which would prevent how dramatically your payments can change. Periodic rate caps limit yearly fluctuations, while lifetime caps limit increases over the life of the loan.
The interest rates of adjustable rate mortgages are typically lower than fixed-rate mortgages at the beginning of the loan term. This means you can purchase bigger and better homes for less than you would with other types of mortgages. However, as time goes on, the interest rates tend to rise, so be prepared for your monthly payments to increase as a result.
Want to discuss an adjustable rate mortgage loan in Las Vegas or Reno, NV, with a member of our team? Call us today for more info. We look forward to hearing from you!
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