How ARM
Mortgages Work
An adjustable rate mortgage (ARM) is a home loan that starts off with a fixed-interest rate and later turns to a fluctuating interest rate. Some home owners like ARM mortgages because the initial fixed-interest rate is low, which saves you quite a bit of money up front. However, ARM mortgages aren’t for everyone, especially since interest rates are unpredictable and could possibly cost you more money over the long term.
Most of the ARM mortgages from National Bank Of Kansas City adjust annually. This means that after the fixed-rate period of time, for example 3, 5, 7 years has expired, your interest rate and payments may change every year for the life of your loan. Our most popular ARM mortgages have a fixed-interest rate of 5 years.
The Costs of Adjustable Rate Mortgages
When deciding on an adjustable rate mortgage, it all comes down to your income and your expenses. Answer these questions to see if an ARM loan works for you.
- Are you going to sell your home before the fixed-rate portion of your home loan expires? If so, then an adjustable rate mortgage might be ideal.
- Do you plan to accrue more debt? If so, are you certain you can afford higher payments on your home mortgage and your other bills?
- Can you afford to pay the penalty fees associated with paying off your home loan sooner? (In some cases, there are penalty fees for paying off your ARM loan sooner.)
- Do you anticipate an increase in your annual income that would be enough to cover rising home mortgage payments?
To learn more about ARM mortgages and whether or not it is the right loan for you, call to speak with one of our loan professionals – 1-800-375-8096.
Get an ARM Loan mortgage quote.
Apply for an ARM mortgage loan.
Learn more about other types of loans.
