Poli Adjustable Rate Mortgage (ARM) Programs.
In addition to fixed rate mortgages, Poli Mortgage also offers Adjustable Rate Mortgage (ARM) programs. ARM loans are generally structured with a lower introductory interest rate that fluctuates over the life of the loan according to a set of terms identified in the loan agreement. ARM rate adjustments typically parallel the movement of a current index rate, such as treasury securities, LIBOR or the Cost of Funds Index. The ARM loan agreement often also sets a cap on how high or low the interest rate can fluctuate during specified adjustment periods, as well as over the life of the loan.
For example, on a 5/1 year ARM loan with caps of 2/2/5, your interest rate would have the following limitations:
- The initial cap -- a 2 in this example -- indicates the interest rate cannot be increased or decreased more than 2 percentage points at the end of the first term of the loan. In this case, that would be 5 years.
- The second 2 represents a cap on how much the interest rate can be adjusted up or down annually after the first interest rate adjustment.
- The final number in the sequence -- a 5 in this case -- is known as the lifetime cap. This variable limits the number of percentage points an interest rate can increase or decrease over the life of the loan. All ARM mortgages are required to have a lifetime cap.
Common Adjustable Rate Mortgage Options:
The 3 in a 3/1 ARM indicates the length of time your initial interest rate will be honored, and the 1 indicates an annual adjustment period over the remaining length of the full loan term (27 years).5/1 ARM
In this scenario, the initial interest rate is locked for 5 years, then adjusted annually thereafter for the remaining 25 years of the full loan term.7/1 ARM
This ARM loan offers a an initial rate lock of 7 years, then annual adjustments for the remaining 23 years of the full loan term.
Poli Mortgage Group offers several adjustable rate mortgage programs, with each of them offering a unique set of higher or lower ARM terms. For more information on which ARM loan will work best in your situation, please contact a Poli Mortgage loan officer.