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FDIC-Insured - Backed by the full faith and credit of the U.S. Government
Adjustable Rate Mortgage Loans
Looking for flexibility in your mortgage payments? An adjustable-rate mortgage (ARM) offers a lower initial interest rate than fixed-rate options, and you may benefit from more affordable payments during the early years of your loan. As market conditions change, your rate may adjust, but we’re here to help you understand how it works.
Features
- Lower initial interest rate – typically lower than a fixed rate mortgage
- Rate and payment are fixed for an initial period – typically 7, 10 or even 15 years
- Rates may adjust annually after an initial fixed period, which changes your monthly payments
- Interest rate caps are in place to limit how high the interest rate can go, which lets you know your maximum rate
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Frequently Asked Questions
When does an adjustable-rate mortgage make sense?
- If you plan to move before the end of the introductory fixed-rate period, so you aren’t concerned about possible rate increases.
- If you want an initial monthly payment lower than a fixed-rate mortgage usually offers.
- If you think interest rates may go down in the future.
What is the difference between a Fixed Rate and an Adjustable Rate Mortgage (ARM)?
With a fixed-rate mortgage, the monthly principal and interest payment remain constant for the life of the loan. Fixed-rate mortgages work well if you’re on a fixed income or plan to stay in your home for more than 5 years because they offer stable payments and long-term protection against rising mortgage interest rates.
After a predetermined fixed-rate period, an adjustable rate mortgage (ARM) adjusts annually in accordance with current market rates. It usually offers lower initial rates than a fixed-rate mortgage, but can increase after the fixed-rate period. ARMs are ideal if you don’t qualify at higher fixed interest rates, you can financially manage fluctuating payments, or you’re planning to sell within 5-10 years.
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111 Wood Avenue South
Suite 200
Iselin, NJ 08830Mailing Address
P.O. Box 1001
Iselin, NJ 08830-1001
