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Ready to start your home buying journey? Apply now and get pre-approved for your mortgage.
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Know the rates, know your options. Start building your homeownership plan today.
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Get a clear picture of your monthly mortgage payment using your rate, credit score, and down payment information.
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Not sure what fits your budget? This calculator factors in your income, debts, and down payment to help you find the right price range.
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About
10/1 ARM
<p class="MsoNormal">This ARM offers a super low interest rate for the first 10 years, after which the rate resets.</p>
Benefits
Lower Initial Payments
Enjoy lower monthly payments during the first 10 years compared to a 30-year fixed mortgage.
Increased Borrowing Power
Lower initial interest rates allow you to borrow more, potentially affording a better or bigger house.
Potential for Decreased Payments
When rates start to adjust, they may go lower, potentially reducing your monthly payments.
Long Fixed-Rate Period
Enjoy a full decade of fixed rates before any adjustments occur, providing long-term stability.
10/1 ARM Mortgage Information
<p>A 10/1 ARM mortgage features a fixed rate for the first ten years, and then the interest rates start to vary every year for the remaining 20 years of the 30-year loan term. To better understand how this ARM can fit into your homeownership plans, you can start by <a href="/apply">speaking to one of our seasoned experts</a>.</p>
How Does 10/1 ARM Work?
<p>In a 10/1 ARM mortgage:</p><ul><li>The interest rate is fixed for the first 10 years.</li><li>After 10 years, the rate becomes variable for the remaining loan term.</li><li>The rate can increase or decrease, aligned with market trends.</li><li>ARM interest rates have two parts: a base rate and an index/margin rate.</li></ul>
Understanding ARM Rate Caps
<p>ARM rates are often represented by three numbers, like 2/2/5:</p><ul><li>The first number is the maximum increase at the initial adjustment.</li><li>The second number is the maximum increase for each subsequent adjustment.</li><li>The third number is the lifetime cap on interest rate increases.</li></ul>
When Does a 10/1 ARM Adjust?
<p>The adjustment depends on the closing date of the mortgage. For example, if the loan closes on July 1, 2024:</p><ul><li>The first rate adjustment will occur on July 1, 2034.</li><li>Subsequent adjustments will happen annually on July 1.</li><li>This continues until the end of the loan term.</li></ul>
Pros and Cons of a 10/1 ARM
<p>Understanding the advantages and disadvantages of a 10/1 ARM can help you make an informed decision.</p>
Additional Considerations
<h4>Pros:</h4><ul><li>Lower initial payments for the first 10 years</li><li>Increased borrowing power due to lower initial rates</li><li>Potential for decreased payments if rates fall after the fixed period</li></ul><h4>Cons:</h4><ul><li>Potential for higher overall costs if rates increase</li><li>More complex terms compared to fixed-rate mortgages</li><li>Risk of payment shock if rates rise significantly after the fixed period</li></ul>
When is a 10/1 ARM Right for You?
<p>A 10/1 ARM might be suitable if:</p><ul><li>You plan to sell or refinance within 10 years</li><li>You can negotiate better initial interest rates</li><li>You expect your income to increase in the future</li><li>You're comfortable with potential rate changes after 10 years</li></ul>