Newark Mortgages & Loan Information
Adjustable-Rate Mortgages (ARMs)
Two-Step Mortgage: This special type of ARM provides the benefit
of initial low rates with the stability of longer term financing because
it adjusts only once - either at seven years or at five years. After
that initial adjustment, the mortgage maintains a fixed rate for the
remaining 23 or 25 years of a 30-year mortgage repayment term. For example,
if your initial interest rate were 8%, you would pay that rate for the
first seven (or five) years. Then, for the remaining 23 (or 25) years,
you would pay an interest rate that is indexed to the value of the 10-year
U.S. Treasury security on the adjustment date. (At the adjustment date,
there is no additional refinancing cost, no forms to complete, and no
re-qualification necessary.) This new rate can never be more than 6
percentage points higher than your old rate. There are no limits on
how much lower the adjusted interest rate can be. For more information
about two-step mortgages contact our Newark New Jersey mortgage brokers.