QandAs: Loans

What is a 7/1 ARM Interest Only?

Answer:
Borrowers who choose a 7/1 ARM interest only mortgage

can take advantage of an interest only period and adjustable rate mortgage. If you want to keep your mortgage payments low, or qualify for a more expensive home, this home loan may be right for you.

With a 7/1 ARM interest only, borrowers benefit from a seven year interest only period that features a fixed rate. Thus, you’ll enjoy short-term reduced payments. As soon as the interest only period ends, the loan switches to an adjustable rate mortgage with annual rate adjustments. Each adjustment is based on an index, and the mortgage rate can rise or fall.


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