Benefit from lower initial payments during the fixed-rate period, which can make purchasing a home more affordable upfront or free up cash flow. This can be ideal if you expect interest rates to fall or plan to sell before adjustments begin.
ARMs come with rate caps that limit how much your interest rate can increase during each adjustment period and over the lifetime of the loan, offering some protection against extreme payment shocks.
Starts with a rate typically below fixed-rate options.
Rate is stable for the first 3, 5, 7, or 10 years.
Rate changes periodically after the fixed period.
Limits on how high the rate can go.