Mortgage 101 - Adjustable Rate Mortgages (ARMs)

Welcome to Mortgage 101, where we look to provide the basic knowledge, which is (for some reason) pretty hard to come by in the mortgage industry.

Adjustable Rate Mortgages (ARMs) can be a great tool... for both mortgage professionals and consumers alike. However, they can be intimidating.

Let's go over the ins and outs of ARMs, so we can demystify them a bit, and you can see if one would be right for you, or your borrowers.

[YourMomfailedu]

Just subbed! TY so much! I'm taking the MLO PE course right now. Couldn't understand why the last number 3/2/8 on the arm was going back to the rate prior rather than the margin. I might still have to watch this a few more times.

[DerekMerkel-tp]

Great video, studying for my MLO and needed this to really help me understand ARMS, thank you!

[jourjor]

lower down the music background bro...

[haleynicoledance]

your delivery was immaculate, better than my teacher (shh). I still dont understand how or why you would have a lifetime cap of 8 if ALL SUBSEQUENT adjustments are capped at 2. If there's a cap for all subsequent adjustments in any year, why do you need an additional lifetime cap, and how can it be so much higher???
:(
...anyone?

[samanazaidi]

What a great video!

But just to make sure I understand let’s use the following numbers. If I were to purchase a home with an ARM of 10/6 at a note rate of 4.25% and CAP of 5/1/5, this would mean after 10 years of paying a fixed rate of 4.25%, the adjustable rate in the first year will be the margin + index. The rate will then be readjusted every 6mo for the life of the loan. Ok. I think I got that part down.

But this is where I need some clarification. The first year of adjustment according to the CAP given above, can never be 5% higher than my initial note rate which means in this case, my rate can never be higher than 9.25% (initial rate+5%). Is that correct?

Any help would be much appreciated. Thanks again for the awesome video!

[justinbieber]

ARM never go down.. How do you think everyone lost their home last realestate crash.... BIG SALES PITCH BY BANKS, You can always refinance later ??? NOT WHEN YOU ARE UNDERWATER, YOUR HOME VALUE DROPS 30-40%

[interianoh]

Do you this information written? Thanks

[samanazaidi]

What a great video!

But just to make sure I understand let’s use the following numbers. If I were to purchase a home with an ARM of 10/6 at a note rate of 4.25% and CAP of 5/1/5, this would mean after 10 years of paying a fixed rate of 4.25%, the adjustable rate in the first year will be the margin + index. The rate will then be readjusted every 6mo for the life of the loan. Ok. I think I got that part down.

But this is where I need some clarification. The first year of adjustment according to the CAP given above, can never be 5% higher than my initial note rate which means in this case, my rate can never be higher than 9.25% (initial rate+5%). Is that correct?

Any help would be much appreciated. Thanks again for the awesome video!

[peteryang]

im ready to take on the world now, thanks

[sohostory_dev]

Fantastic explanation! Thank you for the refresher!!

[codymccormick]

Do you recommend compucram or on course for exam prep for the nmls exam?

[dericdinh]

the payment base on 30 years amorization.

[jackhansel]

I really appreciate this but can you turn the music down or not feel the need to include it. Trust me, we're here for your content not your noncopyright music.

[roosterinmarari]

stupid loud ass music in the background, exited right after the intro

[poncejerry]

Man testing on Tuesday!!! This made things clear!! Appreciate you!! Hope it comes back your way