- With an adjustable-rate mortgage, your interest rate and monthly principal and interest (P&I) payments remain the same for an initial period of 5, 7, or 10 years, then adjust annually.
- Loans available in a variety of longer terms.
- Includes an interest rate cap that sets a limit on how high your interest rate can go.
- Typically an adjustable-rate mortgage has a lower initial interest rate than a fixed-rate mortgage.
- The interest rate cap limits the maximum amount your P&I payment may increase at each interest rate adjustment and over the life of the loan.
- May provide flexibility if you expect future income growth or if you plan to move or refinance within a few years.
- Monthly principal and interest payments may increase when the interest rate adjusts.
- Your monthly principal and interest payments may change every year after the initial fixed period is over.