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Adjustable-Rate Mortgage (ARM)

An Adjustable-Rate Mortgage (ARM) is a mortgage that starts off with a great low rate and then adjusts after a period of time. For many, a mortgage with a rate that will eventually fluctuate during the course of the loan is scary. However, it doesn’t have to be. In fact, it may be the best mortgage option for you. An ARM is mostly beneficial for those homeowners who are not looking to stay in their home for a long time. This would apply to people who move around a lot because of their job or a couple who in the near future may want a bigger home to accommodate their growing family.

At Alabama Telco, we offer two types of ARMs – a 5/1 and a 7/1.* This basically means the interest rate will stay the same for 5 or 7 years, depending on which ARM product you choose, and then adjust yearly afterwards. You will enjoy a lower payment at the beginning of the loan, making it easier on your pocketbook than a fixed-rate mortgage for the same loan amount. Moreover, an ARM could be less expensive over a long period than a fixed-rate mortgage if interest rates remain steady and move lower. In addition, you may be able to avoid paying PMI (Private Mortgage Insurance). Another benefit to applying for an ARM at Alabama Telco is that unlike most lenders, we do not charge a prepayment penalty if you refinance or pay off the loan early.

To find out if you’re a good candidate for an Adjustable-Rate Mortgage, contact our Mortgage Specialist at (205) 985-2890.

*APR = Annual Percentage Rate. A 5/1 ARM which will be a fixed rate for 5 years, then will adjust each year thereafter, limited to a 2% increase or decrease annually, with a lifetime cap of 5%. A 7/1 ARM which will be a fixed rate for 7 years, then will adjust each year thereafter, limited to a 2% increase or decrease annually, with a lifetime cap of 5%.Your APR will vary based on your final loan amount, credit history, loan to value, margin, origination fees and finance charges. Rates are subject to change without notice. For a list of our current mortgage rates, click here.

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