Adjustment Periods for ARM’s and mortgages
Oct 20th, 2007 by Manju
The adjustment period of an ARM is the time between interest rate adjustments. In most cases, this is one year, but can be as low as one month. Most ARMs are hybrid mortgages, amortized over a thirty year period. This means for the first few years, the interest rate is fixed, and after that initial period, the interest rate becomes adjustable. In advertisements this is often represented as, for example, 3/27, which means that the mortgage has a fixed interest rate for the first three years, and the rate is adjustable for the remaining 27 years. Note, however, that a 5/6 ARM does not follow this pattern. This one still has a thirty year amortization period, but the adjustment period is six months.
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