# What are refinance rates

### Adjustable Rate Mortgages

Adjustable Rate Mortgage ("ARM") products have an initial fixed rate period of 3, 5, 7, or 10 years, and a full loan term of 30 years (360 months). After the initial fixed period has expired, the interest rate will be adjusted annually based upon an index plus a margin. An interest rate "cap" limits how high the interest rate may rise at each adjustment. Interest rate caps differ by ARM product.

Depending on market conditions at the time you lock your Initial Interest Rate, as well as the point option you select, your Initial Interest Rate may not be based on the Index used to make later adjustments. Instead, your Initial Interest Rate may have a discount or premium. A "premium" occurs when the Initial Interest Rate is more than the sum of the Index plus Margin. A "discount" occurs when the Initial Interest Rate is less than the sum of the Index plus Margin. Your interest rate may not move in the same direction as the Index. For example, if your loan has a premium, your interest rate may decline on the First Rate Change

Date even if the Index remains the same or increases. If you choose a rate lock option that provides for a floating rate, your Initial Interest Rate at closing may be different from the interest rate in effect at the time you apply for your loan. The amount of the premium or discount may change as a result.

Example: Let's assume you have an ARM loan that is fixed for the first five years; a loan amount of $250,000; a loan term of 30 years (360 months); an initial interest rate of 3.50%; a margin of 2.25%; an initial interest rate cap of 2.00%; an annual rate cap of 2.00%; and a lifetime cap of 5.00%. Under these assumptions, your initial loan payment for principal and interest will be $1,122.62. At your first adjustment, the interest rate cannot increase above 5.50% or decrease below 2.25% (the margin). If the interest rate reached the lifetime maximum cap of 8.50%, your payment would reach an amount of $1,788.81.

State and other conditions and restrictions may apply.

For a more personalized rate quote, please complete the fields under "Mortgage Rate Quotes".

Source: www.amerisave.com

Category: Credit

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