ARMS

Adjustable Rate Mortgages (1 month, 6 month, 1 year, and 2/28):

A general definition of an adjustable rate mortgage is any home loan subject to a rate adjustment sometime within two years of the loan being established.  These mortgages are available for loans up to $3 million . Because these loans have very short fixed periods (if any at all), and are tied directly to the markets, their start rates are usually much lower than fixed and hybrid loans.   With that said,  adjustments to said rate can be measureable and fast should the index you are tied to suddenly move.  In the wrong direction and  your monthly payments can increase dramatically, on the other hand if the market moves in the right direction your monthly payment will fall. Although these mortgage loans are based on standard thirty year terms, they are generally used as short term instruments. It is highly advisable to discuss and have ready an exit plan that is realistic should you decide to take advantage of an adjustable rate mortgage program.  Make sure to discuss it with your mortgage professional.