This is an Adjustable Rate Mortgage; however, it’s different than a typical ARM in that your Annual Percentage Rate will stay the same for the first 5 years of the loan versus changing every year. After 5 years, the rate can adjust every 6 months, depending on the market.
- Rate cap at 5%. A rate cap is a limit on how much the rate can change at the end of each adjustment period over the life of the loan.
- Index = SOFR
- Margin = 3.0%
- Fixed rate conversion option is not available.