OCEAN PACIFIC MORTGAGE

Home Purchase Loan Types

Adjustable-Rate Loans (ARMs)

Adjustable-rate mortgages (also called ARMs) feature an interest rate that periodically adjusts
with changing market rates. ARMs are attractive because they offer start rates
that are lower than the interest rates of fixed rate home loans. This
typically enables you to begin with lower monthly payments and qualify for a larger loan.

ARMs are available in government, conforming and jumbo loan amounts. A start rate,
also known as the initial interest rate, gives you a special low monthly
payment for a set amount of time, which is typically 1, 3, 5, 7 or 10 years.

After the start rate period is over, your interest rate is based on
the performance of a financial index, such as the average interest rate or
yield on treasury bills. For a better understanding and a historical perspective,
see ARM financial indices. Before you agree to an ARM, be sure you
can afford the highest payments that would result.

Choose an adjustable-rate loan if you:

• Need extra borrowing power
  
• Need a lower initial rate to afford to buy the home you want
  
• Want to save money in the first few years of home ownership
  
• Plan to move or refinance in a few years
  
• Are confident your income will rise enough in the coming years
  to handle any increase in payments
  
• Are purchasing or refinancing at a time when interest rates
  are comparatively high