An ARM is a mortgage loan that has an interest rate that can change periodically during the life of the loan. Most ARMs are subject to change only once per year. Some can have a fixed interest rate for a specified number of years at the beginning of the loan and then change annually after that. For example, a 3/1 ARM has a fixed rate for the first three years of the loan and then can change once a year after that.
Your loan documentation will specify how often your rate can change as well as the minimum and the maximum amount it can change each period and how much it can change over the life of the loan.
When the rate on an ARM changes, the payment will change. That’s why your Seattle Credit Union mortgage expert will be sure that you can afford your loan at the initial rate as well as at the maximum rate. The last thing you want is to have your payment increase beyond what you can afford to pay. Seattle Credit Union is dedicated to making sure that our members don’t find themselves in this situation.
With a fixed rate loan, your rate does not change for the life of the loan, regardless of the market.