Article: Understanding An Adjustable Rate Mortgage
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Understanding An Adjustable Rate Mortgage
An adjustable rate mortgage is exactly what the name implies; a home mortgage loan with an interest rate that gets adjusted during the life of the loan.
If you go out looking for an adjustable rate mortgage, the lender will usually have two numbers associated with the loan offer; such as 5:1, 1:1, or 3:2. These are some common numbers associated with adjustable rate mortgages, but there are others as well.
The first number indicates the number of years that the adjustable rate mortgage will operate like a fixed rate mortgage until it comes up for its first interest rate review. The second number indicates the interval at which the mortgage will be reviewed thereafter. Fox example a 5:1 adjustable rate mortgage means that the interest rate given at the time of ...
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