FIXED VS VARIABLE

Fixed Rate

Interest rate on the note remains the same through the term of the loan

Variable rate or Ajustable Rate Mortgage (ARM)

There are several different type of ARM loans: 10/1, 7/1, 5/1 and 3/1. Each type has its own program such as 10/1 (5/2/5) or 10/1 (2/2/5).

Your interest rate can chagne in 120 Months (10/1), 84 Months (7/1), 60 Months (5/1), or 36 Months (3/1), and every year thereafter.

Your interest rate cannot increase more than 5 if 5/2/5 or 2 if 2/2/5 percentage point(s) at the initial adjustment.

Your interest rate cannot decrease more than 5 if 5/2/5 or 2 if 2/2/5 percentage point(s) at the initial adjustment.

Your interst rate cannot increase more than 2 percentage point(s) at each periodic adjustment.

Your interst rate cannot decrease more than 2 percentage point(s) at each periodic adjustment.