A 10/1 adjustable rate mortgage (ARM) is a loan where the interest rate is fixed for 10 years and then adjusts annually for the next 10 years. After the initial 10-year period the interest rate on a 10/1 ARM can change once each year for the remaining life of the loan.
10/1 ARMs are often used to lower the monthly payment on a mortgage. In most cases the interest rate on a 10/1 ARM is lower than the interest rate on a 30-year fixed-rate mortgage. This can help you save money on your monthly mortgage payment.
The interest rate on a 10/1 ARM can change after the first 10 years but it will never change more than 2% per year up or down. That means that if interest rates go up 1% your interest rate will only increase to 11% and if interest rates go down 1% your interest rate will only decrease to 9%.
The interest rate on a 10/1 ARM is usually lower than the interest rate on a 30-year fixed-rate mortgage. That means you’ll save money on your monthly mortgage payments.
If interest rates go up:
If interest rates rise 1% your interest rate will only increase to 11%.
If interest rates rise 2% your interest rate will only increase to 12%.
If interest rates rise 3% your interest rate will only increase to 13%.
If interest rates go down:
If interest rates fall 1% your interest rate will only decrease to 9%.
If interest rates fall 2% your interest rate will only decrease to 8%.
If interest rates fall 3% your interest rate will only decrease to 7%.
A 10/1 ARM can be a good option if you plan on selling your home or refinancing your mortgage within the next 10 years.
If you have a 10/1 ARM and interest rates rise you may want to consider refinancing into a fixed-rate mortgage.
If you have a 10/1 ARM and interest rates fall you may want to keep your loan and enjoy the lower interest rates.
What is a 10/1 adjustable rate mortgage?
Answer: A 10/1 adjustable rate mortgage is a mortgage with an initial fixed interest rate for the first ten years and an adjustable interest rate for the remaining term of the loan.
What are the benefits of a 10/1 ARM?
Answer: One of the benefits of a 10/1 ARM is that it offers a lower interest rate for the first ten years of the loan.
This can save the borrower a significant amount of money over the course of the loan.
What are the disadvantages of a 10/1 ARM?
Answer: One of the disadvantages of a 10/1 ARM is that the interest rate is subject to change after the first ten years.
This means that the monthly payment could go up or down depending on the market interest rate at the time.
What is the minimum interest rate for a 10/1 ARM?
Answer: The minimum interest rate for a 10/1 ARM is the same as the interest rate for a fixed-rate mortgage.
What is the maximum interest rate for a 10/1 ARM?
Answer: The maximum interest rate for a 10/1 ARM is typically two percent higher than the interest rate for a fixed-rate mortgage.
What is the interest rate after the first ten years for a 10/1 ARM?
Answer: The interest rate after the first ten years for a 10/1 ARM is determined by the market interest rate at the time.
What is the monthly payment for a 10/1 ARM?
Answer: The monthly payment for a 10/1 ARM is the same as the monthly payment for a fixed-rate mortgage.
How often can the interest rate change for a 10/1 ARM?
Answer: The interest rate can change every year for a 10/1 ARM.
What is the interest rate cap for a 10/1 ARM?
Answer: The interest rate cap for a 10/1 ARM is typically six percent.
What is the life of a 10/1 ARM?
Answer: The life of a 10/1 ARM is 30 years.
What is the margin for a 10/1 ARM?
Answer: The margin for a 10/1 ARM is the same as the margin for a fixed-rate mortgage.
What are the closing costs for a 10/1 ARM?
Answer: The closing costs for a 10/1 ARM are the same as the closing costs for a fixed-rate mortgage.
Can I refinance my 10/1 ARM?
Answer: Yes you can refinance your 10/1 ARM.
Should I refinance my 10/1 ARM?
Answer: You should refinance your 10/1 ARM if the interest rate decreases or if you need to cash out some equity.
What if I can’t afford the monthly payments for my 10/1 ARM?
Answer: If you can’t afford the monthly payments for your 10/1 ARM you may be able to get a loan modification.
