Monthly payments that flex over time.
Need a mortgage with a lower upfront rate? Plan to move or refinance later? An ARM can lend a helping hand.
Adjustable-Rate Mortgage: Features & Benefits
Deciding between an adjustable-rate and fixed-rate mortgage? Here’s why going with an adjustable-rate mortgage could be right for you, your wallet, and your homeownership goals.
Variable terms
5/1, 7/1, and 10/1 year terms let you choose a low fixed rate period before adjustments begin.
Variable rates
At the end of the fixed term (5, 7, or 10 years), your mortgage rate may adjust annually.
Capped adjustments
Adjustments can raise or lower your rate, but we’ll cap increases at a pre-set maximum.
Adjustable-Rate Mortgage FAQs
An adjustable‑rate mortgage is just that: a home loan where the interest rate stays fixed for a set, initial period of time, before adjusting annually based on market conditions. This means your monthly payment could go up or down after the fixed period ends.
Adjustable-rate mortgages typically start with lower rates than fixed-rate mortgages. While this rate may increase during the adjustment period, it could also go even lower.
The first number tells you how long the rate will stay fixed, while the second number tells you how often the rate will adjust afterward over the lifetime of the loan (typically 30 years).
For example, a 5/1 ARM’s rate is fixed for 5 years, then adjusts once per year afterward.
Since an adjustable-rate mortgage offers lower rates upfront during the fixed period, it could be the right choice if you:
- Move frequently
- Plan to sell before the fixed period ends
- Are budget-conscious and need low initial payments
- Expect your income to grow later
- Plan to refinance in the future
Pros:
- A lower upfront interest rate
- Lower monthly payments during the fixed period
- The potential for even lower payments if market rates drop
Cons:
- Rates can rise with the market, causing you to pay more over time
- These fluctuations can complicate your long-term budgeting plans
Yes! Many homeowners with adjustable-rate mortgages choose to refinance before or during the adjustment period, once market rates have dropped or their living arrangements and budget have stabilized.
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Disclosures
To receive MaxMortgage discount, mortgage payment must be an automatic payment that comes from an LMCU checking account with an ACH deposit. Some programs may not be eligible, discuss with your mortgage loan officer for further details.
