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Adjustable Rate Mortgage

Searching for an adjustable rate mortgage can be confusing. There are literally hundreds of different combinations of adjustable rate mortgages available. The typical adjustable rate mortgages that are very common are short term adjustable with a fixed period of between 2 to 10 years. You'll see terms such as 2/6 ARM or maybe a 5/1 ARM, 10/1 or 10/6.

Common Terminology

The first term is the fixed period in years 5/1 is fixed for 5 years and becomes adjustable after the fifth year. The 1 typically means that the adjustable rate follows the 1 year US Treasury Bill. A 5/6 is fixed for 5 years and after the fifth year, follows the 6 month LIBOR or London Interbank Offered Rate. Adjustable rate mortgages carry a margin above the index that they follow. For instance, if the LIBOR is 4.32% and the margin that your mortgage follows is 2.25% above the index, then the total rate would be 6.57% when it reaches the fully adjusted rate.

Consider Rate Caps and other details

There are other considerations when choosing your adjustable rate mortgage such as the maximum, or Cap, that the rate can reach, how often it can adjust once it starts adjusting and whether it is assumable or not. There are other factors to consider on any loan of course, such as prepayment penalties and how these penalties may affect your plans to sell or refinance in the future.


When applying for an adjustable rate mortgage, make sure that you ask about all of the available adjustable available and be sure that you tell your loan officer what your plans are in the next 2 to 5 years. You need to consider the whether to have a prepayment penalty or not and what fixed term you need to suit your comfort level.

If you are searching for an adjustable rate mortgage, click the apply application button on the top of this page, you mortgage application will be sent to up to four top lenders to compete on your loan.  There is no better way to get a low mortgage quote than by submitting one loan to several lenders at once.  MyLoanExpert makes it simple.

Within you will find money saving ideas that may give you information regarding the latest news that may influence the decision you take on your next mortgage. We encourage you to click through our links page and see all articles and headlines, as you become more informed about recent money saving advice.

If you are searching for any type of mortgage in the USA, whether it be a 30 year fixed or a adjustable rate mortgage, complete one application and get up to four competitive quotes here.

Mortgage Refinancing Information

Credit Score Factors for Mortgages

Credit Score Factors A credit score can be defined as a number that evaluates the possibility of a person to pay back a loan within a given period of time. When an individual is interested in borrowing money, the lender informs the credit bureau. The bureau comes up with a credit report which is aimed […]

Refinancing Terms

Refinancing Terms If you are in the market looking for refinancing options on your home mortgage, it is important to familiarize yourself with the terms commonly used. Poring over boring mortgage textbooks is not required. Here’s a look at the basic refinancing lingo to get you started. APR: Different lenders calculate the APR or the […]

Mortgage Refinance Tax Implication

Mortgage Refinance and Taxes When you own your home, you get large income tax deduction for mortgage interest. However, when you refinance your mortgage loan into a lower interest rate, you’ll pay less interest but more income tax. HAD vs. HED HAD stands for Home Acquisition Debt and HED stands for Home Equity Debt. HAD […]

Second Mortgage vs PMI

Second Mortgage to offset PMI Many homeowners find it difficult to find the funds for a 20 percent down payment on their homes. Without the down payment, it becomes mandatory for home buyers to go in for PMI (Private Mortgage Insurance). The PMI has to stay in effect until such time that the value of […]

Refinancing for Self Employed

Self-employed people and refinancing While in all other ways, America encourages entrepreneurs, borrowing is one area that most self-employed people face difficulties. Be it a conventional loan or a mortgage on the home, bankers have a problem offering money to the self-employed. This is because the self-employed often show less income than their counterparts in […]

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