Vista Mortgage Corp.

The Smart Way to Pay Off Your Mortgage

Adjustable Rate Mortgage

Loans (ARM)

As your mortgage loan provider, we are here to outline all possible mortgage loan options available to you and your family. As a borrower, it is important for you to have the information you need in order to weigh the benefits against the possible risk unique to each loan program. One type of loan for you to consider is an ARM loan. How is an ARM loan different from a Fixed Rate loan? ARM stands for Adjustable Rate Mortgage. The interest rate used to figure the payment "adjusts" according to a specific financial index. Therefore your loan payment loan payment may increase or decreased after the loan is closed. By contrast, a fixed rate loan has an interest rate that remains constant throughout the tern of the loan. How is an ARM interest rate determined? Interest rates on ARM loans are usually based on an "index" with the addition of a "margin".

index
A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. This interest rate is subject to any caps that are associated with the mortgage.

margin
For an adjustable-rate mortgage (ARM), the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change.

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