Purpose
Refinance Purchase Home Equity

Loan Type
Fixed ARM Interest Only FHA

Amount

State
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

Display Mortgage Rates &
Refinance Rates in your State

Does Adjustable Rate Mortgage Have A Fixed Rate?

By Jim Micheals

An adjustable rate mortgage generally will come with an introductory fixed interest rate period. These loans are known as 1/1, 5/25 or 7/23 loans. The first number represents the amount of years that the mortgage will remain on a fixed, low rate. The second number represents the amount of years that the loan will have an adjustable rate. The second number in a 1/1 mortgage represents the fact that the mortgage rate will change once a year, each year for the remaining balance.

Why Should I Accept An Adjustable Rate Mortgage – Isn’t That Risky?

There are risks involved with an adjustable rate mortgage. However, if you do not want to remain in an adjustable rate mortgage, you have the option to refinance to a conventional fixed rate mortgage at a later period. Many people accept an adjustable rate mortgage because they have significantly low interest rates in the beginning. Because the rates are so low, the monthly payments are also low. Near the end of this introductory period the borrower often refinances to avoid the increase in interest. If you are still having credit issues that prevent you from refinancing into a conventional loan don’t worry. You still have the option to refinance into another adjustable rate mortgage and use the introductory period again to your advantage.

Who Benefits Most From An Adjustable Rate Mortgage?

Many investors like adjustable rate mortgages because they do not intend to hold on to the property for an extended period of time. Many hoe owners also benefit from the very low monthly payments these loans offer at first. These people, who may not have qualified for a conventional loan because of bad credit, use the introductory period to boost their credit scores. This prepares them for the time when they can get a low interest fixed rate loan.

Related posts:

1. What is a 2/28 Adjustable Rate Mortgage?
2. What Is The Difference Between An Adjustable Or Fixed Mortgage Rate?
3. How Can I Stabilize My Adjustable Rate Mortgage Payments?
4. Are Adjustable Rate Mortgages Ever Better?
5. How Soon Can I Refinance An Adjustable Rate Mortgage?