Standard
ARM Programs
A
few options are available to fit your individual needs and your risk tolerance
with the various market instruments.
ARMs
with different indexes are available for both purchases and refinances. Choosing
an ARM with an index that reacts quickly lets you take full advantage of falling
interest rates. An index that lags behind the market lets you take advantage of
lower rates after market rates have started to adjust upward.
The
interest rate and monthly payment can change based on adjustments to the index
rate.
6-Month
Certificate of Deposit (CD) ARM
Has a maximum interest rate adjustment
of 1% every six months. The 6-month Certificate of Deposit (CD) index is generally
considered to react quickly to changes in the market.
1-Year
Treasury Spot ARM
Has a maximum interest rate adjustment of 2% every
12 months. The 1-Year Treasury Spot index generally reacts more slowly than the
CD index, but more quickly than the Treasury Average index.
6-Month
Treasury Average ARM
Has a maximum interest rate adjustment of 1%
every six months. The Treasury Average index generally reacts more slowly in fluctuating
markets so adjustments in the ARM interest rate will lag behind some other market
indicators.
12-Month
Treasury Average ARM
Has a maximum interest rate adjustment of 2%
every 12 months. The treasury Average index generally reacts more slowly in fluctuating
markets so adjustments in the ARM interest rate will lag behind some other market
indicators.