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Thank you for visiting today. If this is your first visit, take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you and tell you how we can serve all your real estate needs. Call Concept Real Estate today at
(618) 281-7100

If you need direct contact for any of our agents here is their contact info.

Deb Campbell
(314) 956-0080
dcampbell@conceptrealtors.com

Angie Causey
(618) 781-9092
angie@conceptrealtors.com

Gregg Crawford
(618) 977-5318
gcrawford@conceptrealtors.com 

Jane Crawford
(618) 977-7065
jcrawford@conceptrealtors.com

Rob Davis
(618) 558-5710
rdavis@conceptrealtors.com

Nick Gibson
(314) 666-4318
ngibson@conceptrealtors.com

Tari Jacobs
(618) 974-8899
tjacobs@conceptrealtors.com

Kelly Rompel
(618) 334-1214
krompel@conceptrealtors.com

Stephen Rothermich
(636) 734-3774
srothermich@conceptrealtors.com

Kathy Sainz
(314) 605-0755
ksainz@conceptrealtors.com

Blake Salger
(618) 791-0210
bsalger@conceptrealtors.com

Katie Stumpf
(618) 504-0788
kstumpf@conceptrealtors.com

Inger Varel
(618) 920-7799
ivarel@conceptrealtors.com

Jim VonDerHaar
(314) 494-8874 
jimv@conceptrealtors.com

You can always call our office and we will get a message to any of our agents (618) 281-7100.

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Adjustable Rate Mortgages - The Basics

An adjustable rate mortgage (ARM) has an interest rate that fluctuates periodically. This is in contrast to a fixed rate mortgage, which always has the same interest rate.

Every ARM has basic components:

  1. An index
  2. A margin
  3. Adjustment Period
  4. An interest rate cap
  5. An initial interest rate

The Index

An ARM’s interest rate is tied to one of many economic indices, some examples of which are the 1-year constant maturity Treasury security, the Cost of Funds Index, or the London Interbank Offered Rate. Different indices move at different rates so know the characteristics of the index used for your ARM.

The Margin

The interest rate for your ARM will be calculated by adding a margin to the interest rate from the index. The margin is basically the markup charged by the lender that allows them to make a profit off of your loan, such as adding 2% to the index, where the 2% is the margin. The margin of your loan usually does not fluctuate.

The Adjustment Period

The Adjustment Period controls when and how often your interest rate changes. For example, if your ARM has an adjustment period of 1 year, your interest rate will be subject to change at the end of each year and your monthly mortgage payment will be recalculated to reflect this change.

The Interest Rate Cap

Interest rate caps are built into the loan to protect the borrower from drastic interest rate fluctuations. The caps limit how much the interest rate or monthly payment can change at the end of each adjustment period. An ARM can also have a cap for the life of the loan. For example, during the life of a loan, the interest rate can only be increased by 5%.

The Initial Interest Rate

The Initial Interest Rate is the interest rate that you start with at the beginning of your loan period. The length of time your loan stays at this rate is built into the loan. For example, you may stay at the initial interest rate for 1 year, 5 years, or another length of time depending on your specific mortgage. This type of ARM is generally referred to as a Hybrid ARM. The initial interest rate for an adjustable rate mortgage is generally lower than that of a fixed rate mortgage.

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Jane Crawford, SFR
Managing Broker
111 N. Main St.
Columbia, IL 62236
Phone: 618-281-7100

jcrawford@conceptrealtors.com

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