Tag: <span>ARM</span>

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HOW DO ADJUSTABLE RATE MORTGAGES WORK?

An Adjustable Rate Mortgage (ARM) is typically a mortgage that is fixed for a period of time, and then becomes adjustable. The typical ARMs are 3/1, 5/1, 7/1, and 10/1. The first number represents the time period the rate is fixed. The second number represents how often the rate changes. Example: A 3/1 ARM means...

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A SIMPLE COMPARISON OF APRs IS NOT ALWAYS TELLING

The APR discloses the cost of credit. The APR is calculated by taking into consideration the finance costs of the loan, and disclosing those costs in terms of the interest rate. The APR is usually different than the note rate on the loan. Often, on a 30-year fixed mortgage, the APR is higher than the...

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WHAT IS AN ARM

An ARM is an adjustable rate mortgage. Many ARMs are like the 5/1 ARM, where the rate is fixed for the first 5 years of the loan, and then adjusts every year thereafter for the balance of the loan term. There is another ARM product called the 5/5 ARM. This product has a low initial...