ARMs offer a lower interest rate for an initial term of 3 years to 10 years. This initial fixed rate period is followed by a period when your rate will adjust at regular intervals. All have rate caps which limit interest rate increases over the life of the loan.
3/1 Adjustable Rate Mortgage*
Interest rate and payment amount is fixed for the first 3 years, then is subject to change every year with caps of 2% per adjustment and 6% for the life of the loan.
5/1 Adjustable Rate Mortgage*
Interest rate and payment amount is fixed for the first 5 years, then interest rate is subject to change every year with caps of 5% at first adjustment, 2% at subsequent adjustments and 5% for the life of the loan.
7/1 Adjustable Rate Mortgage*
Interest rate and payment amount is fixed for the first 7 years, then interest rate is subject to change every year with caps of 5% at first adjustment, 2% at subsequent adjustments and 5% for the life of the loan.
10/1 "Interest Only" Adjustable Rate Mortgage
Interest rate and payment amount is fixed for the first 10 years, then interest rate is subject to change every year with caps of 5% at first adjustment, 2% at subsequent adjustments and 5% for the life of the loan. Amortization begins at the end of the 10 years over the remaining term of the loan. There is no negative amortization.
Ask your People's United Mortgage Expert for details.
* Also Available as an Interest Only, and/or Stated Income Loan with no negative amortization. "Interest Only" period equals the fixed rate portion of the loan during which time principal payments are not required. At the end of this period, the loan will amortize over the remaining term of the loan. For "Stated Income" loans, income listed on the application is not verified. Negative amortization occurs when the mortgage payment is smaller than the interest due which causes your loan balance to increase rather than decrease.
Equal Housing Lender