Adjustable Mortgage Rate Loans, Questions to Ask

Before you sign an ARM agreement, make sure you know the answers to the following questions:

1. What is the current interest rate for fixed rate financing?
2. What is the initial interest rate for the ARM?
3. What is the initial monthly payment?
4. How long does the initial interest rate last?
5. Is there a discount rate, and how will it affect the initial payment?
6. How often does the adjustment period change?
7. Is there a cap that limits the size of the payment change?
8. How much notice must the lender give before each payment change?
9. What index is used at the adjustment period?
10. Where is this index published?
11. What is the margin above the index rate?
12. Is there a cap on the percentage amount that the ARM interest rate can rise at each adjustment period?
13. Is there a cap on the loan's maximum interest?
14. Is there an interest minimum?
15. If the monthly payment does not reduce the mortgage principal balance, is negative amortization permitted?
16. If there is negative amortization, can the loan term be extended? If so, to how many years?
17. What is the policy on paying the ARM off early? Are there any special fees, or penalties involved?
18. Can the ARM be converted to a fixed-rate loan in the future?

For more questions on adjustable rate mortgage loans or contact us at Virginia Mortgage Services, today and we will be happy to discuss all your adjustable mortgage home loan options! Or simply use our online application for adjustable mortgage loans!