An adjustable-rate mortgage (ARM) starts with a fixed interest rate for an initial period and then shifts to an adjustable rate that can vary. This adjustable phase is typically tied to a benchmark such as the London Interbank Offered Rate (LIBOR) or a Treasury index. ARMs generally offer lower initial interest rates and monthly payments for the first few years of the loan. After this period, the rate adjusts based on market conditions and the specific terms of your loan.

While refinancing from a fixed-rate loan to an ARM is less common, it can be a viable option if you plan to sell your home or refinance within a few years. An ARM can provide lower initial payments, which may be beneficial for those who anticipate moving or refinancing before significant rate adjustments.

However, ARMs come with some potential drawbacks. Your interest rate and monthly payments can fluctuate, making your budgeting less predictable. Additionally, you may need to refinance more frequently compared to fixed-rate loans. At Reliance Mortgage, we offer a variety of competitive loan programs designed to meet your needs. Contact us to explore your financing options and find the best solution for your financial situation.