You will receive notification by mail approximately 210 to 240 days (7-8 months) prior to the effective date of the initial interest rate change. This notice will contain an estimate of your new interest rate and payment amount. You will also receive a notice between 60 and 120 days (2-3 months) prior to the effective date of the initial interest rate change. This notice will contain your exact interest rate. Going forward, you will receive an interest rate change notice between 60 and 120 days (2-3 months) prior to the effective date of each interest rate change throughout the life of your loan.
Adjustable Rate Mortgage
The interest rates for ARMs are calculated based on an index rate plus a margin. ARM loans typically calculate the interest rate on adjustment by adding a margin to a specific published index, such as the London Interbank Offered Rate (LIBOR) Index. The value of the index changes periodically, going up or down over time. Changes to the index value may cause changes in your interest rate. The margin that will be added to that index rate is stated in your ARM note.
An adjustable rate mortgage is a loan in which the interest rate in the note can change periodically. The interest rate changes at certain defined points during the life of the loan, based on changes to an index.