ARM LOAN (Adjustable Rate Mortgage) ARM Loans are fixed for a certain period of time, where after that period ARM loan becomes an adjustable loan. How do they work? Each ARM Loan has: Index:LIBOR Margin: give to you by a lender. Each ARM Loan Program is tied to a LIBOR Index. After each period, for example 3/1 ARM would have a rate fixed for 3 years and on the 4th year, your new rate will be LIBOR index + Margin. Some most common ARM Loan Programs:

1/1 ARM

1 year ARM (Adjustable Rate Mortgage) is fixed for 1 year and in 2nd year it becomes an adjustable.

3/1 ARM

3 year ARM (Adjustable Rate Mortgage) is fixed for 3 years and in 4th year it becomes an adjustable.

5/1 ARM

5 year ARM (Adjustable Rate Mortgage) is fixed for 5 years and in 6th year it becomes an adjustable.

7/1 ARM

7 year ARM (Adjustable Rate Mortgage) is fixed for 7 years and in 8th year it becomes an adjustable.

10/1 ARM

10 year ARM (Adjustable Rate Mortgage) is fixed for 10 years and in 11th year it becomes an adjustable