For those looking for low initial rates, an adjustable rate mortgage may be appropriate for your family. These mortgage rates can move up or down, depending on the national index for interest rates.

In general, you’ll have some time during which the rate will be consistent. Different companies offer different time periods, but it ranges from 3-10 years. After that point, your mortgage payments could increase or decrease based on the changes in the interest index.

There are caps that exist to limit how much your payment can rise. In general, they are either

  • A periodic cap, which limits rates from year-to-year
  • A lifetime cap, which limits how much your rates can rise throughout the life of your loan
  • A payment cap, which limits the amount you’d ever pay for your mortgage in dollars, instead of in percentage points.

While it’s true that these loans can be unpredictable, they’re appropriate for people who are planning to move within the fixed-rate time period, or those who can handle the fluctuations in the market, all while keeping a consistently lower interest rate than those with a fixed rate loan.

We can help you find the best option for your family, contact us, today!