Most adjustable-rate mortgage (ARM) loans feature an initial rate period, during which the interest rate and principal and interest payments remain the same.
Once the initial rate period expires, the interest rate will adjust once per year for the remainder of the loan term. The adjustments are based on a fluctuating index plus a margin. When the interest rate adjusts, your monthly payment will usually increase if interest rates go up or decrease if interest rates fall.
Often, an ARM loan may have a lower starting principal and interest payment than a fixed-rate mortgage. But at the end of the ARM loan’s initial rate period, the interest rate and monthly principal and interest payment could go up. If that happens, you will need to be prepared to make bigger payments. To help avoid significant fluctuations, interest rate caps limit how much the interest rate can go up or down at each interest rate adjustment and over the life of the loan.
ARM loans are named by the duration of the initial rate period and how often the rate will adjust thereafter.
One example is the 5/1 Adjustable-Rate Mortgage:
BBVA Compass offers ARMs with initial fixed-rate period options of 1, 5, 7, and 10 years. Contact us to discuss whether an adjustable-rate mortgage is right for you.
Choose from these other mortgage types that might work for you.
Looking for stable monthly payments? With a Fixed-Rate Mortgage, the interest rate on your mortgage loan remains the same for its entire term.
If you’re buying a home with a higher property value and can manage larger monthly mortgage payments, a jumbo loan may be a good choice for you.
Government Loan Programs
If you are looking to apply for a mortgage or to refinance, you may be eligible for a FHA, VA, or USDA loan.
Home Ownership Made Easier (HOME)
Through our Home Ownership Made Easier (HOME) mortgages, BBVA Compass is building stronger communities and helping people achieve the dream of home ownership.
Building your dream home starts with finding the perfect location. With so many considerations to make in preparing to build, let us take care of the lot financing.
Renovation Permanent Loans
Kitchen remodel, attic conversion, basement finishing, or bedroom add-on—major renovations can add serious value to your home.
Foreign National Mortgage
BBVA Compass welcomes the opportunity to provide mortgage services to Foreign Nationals who want to purchase, refinance, build, or renovate a home in the United States.
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