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ADJUSTABLE RATE MORTGAGES (ARM)
An adjustable rate mortgage usually starts with a lower initial interest rate than a fixed rate mortgage. After an initial fixed period of 1 year, the interest rate is reviewed annually and adjusted annually, based on the movement of a specified index. ARMs are subject to a lifetime cap and annual adjustment cap. Your monthly payment changes as the rate changes. ARM loans can be beneficial when interest rates remain steady or decrease, because your initial rate will be lower. If the rate increases, you may adjust to a higher payment as your income increases
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