What is an adjustable rate mortgage?

An adjustable rate mortgage, or ARM, has an interest rate that changes over the life of the loan based on the performance of a variable index plus a margin. Interest rate adjustments are made according to a schedule that is set at loan closing. With each change, the borrower’s monthly payment may go up or down. These periodic interest rate adjustments are limited by adjustment caps defined within the mortgage agreement.

Why choose an adjustable rate mortgage loan?

Lower initial interest rate than fixed rate mortgages
Lower initial monthly mortgage payments than fixed rate mortgages
Greater home buying power than fixed rate mortgages

Old Second offers a variety of adjustable rate mortgage programs:

One-month, six-month, one-year, three-year, five-year, seven-year and ten-year ARM terms are available

Rates may be based on the one-year Constant Maturity Treasury, the one-year LIBOR or the one-month LIBOR

After the initial period of the loan, rates are subject to regular adjustments based on the value of the index (CMT or LIBOR) plus a margin

Adjustable rate mortgages are offered up to $2 million