A fixed ARM loan gives you a fixed rate term, usually three, five, seven or ten years, with adjustable rates thereafter. These loans are typically expressed as a 3/1, 5/1, 7/1 or 10/1 ARM.  The first number represents the number of years the rates are fixed.  The second number indicates the adjustment interval (how often the interest rate will change).  For a 7/1 loan, the fixed period is seven years with annual interest rate adjustments thereafter.

Many of these fixed ARMs loans are now available with an interest only component.  And your payment will be lower each time the principal is reduced.

The advantage of a fixed ARM loan is that it gives you a lower fixed rate mortgage than you'll typically receive with a 30 year mortgage.  This is often an attractive loan choice for borrowers who expect to be selling their home or refinancing within the first 5-10 years.  You'll get the advantage of a lower fixed rate while you are living in the home.  And if your plans remain steady, the adjustable rate wouldn't be due until after you plan to move.

Fixed ARMs are also an attractive loan choice for borrowers who need the lower initital rate of an ARM, but feel the need for added interest rate protection during their first years in the home. 

Whether you plan to move within 10 years or you'd like the added rate protection a fixed ARM loan affords, we will be glad to help you find the best loan program to meet your needs.  We look forward to helping you!

Take me to the ARM vs. Fixed Rate calculator.