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Intermediate ARMs
The most popular intermediate ARM loans are the
3/1, 5/1, 7/1 and 10/1. These loans are normally amortized over
thirty years with the interest rate initially fixed for three,
five, seven and ten years respectively. After the initial fixed
period, these loans typically adjust annually.
Intermediate ARMs are very popular with
borrowers who want the stability of a fixed rate and the benefit
of a lower introductory rate. If you plan to sell or refinance
your home in three to ten years, you may want to consider an
intermediate ARM loan rather than a fixed-rate mortgage. You can
save money with the lower introductory rate, but you risk having
a higher rate if you are still in your home when the
introductory rate period expires and the rate starts adjusting
toward market levels. |
