Why take a 10-1 adjustable rate mortgage (10/1 ARM)?


The 10-1 adjustable rate mortgage (10/1 ARM) is often sought by borrowers who would like to have the stability offered by a fixed rate mortgage but coupled with somewhat lower rates a 10/1 ARM usually offers.

The 10-1 adjustable rate mortgage is commonly tied to the 1-year T-Bill index. The 10/1 ARM rate is based on a predetermined margin between 2 and 3% on the T-Bill index. Normally, this type of ARM is offered with a 30-year amortization period, but also with 40 or even 50 year terms.

You need to ask the lender about the caps and the adjustment frequency of the 10-1 adjustable rate mortgage (10/1 ARM).

Many borrowers taking a 10/1 ARM will also consider an FRM for the same duration of the loan, but often the greater flexibility of ARMs added to a relatively long period of time with low monthly payments will make the 10/1 ARM a winner over the FRM counterpart.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.8/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: