Adjustable-Rate Mortgages (ARMs)
What goes up, must come down. And that's basically the principal of ARMs. The interest rate you pay is adjusted from time to time to keep it in line with changing market rates. This means when interest rates go up, your monthly home loan payments may go up. And, when interest rates go down, your monthly home loan payments may go down.

ARMs are attractive because they offer rates that are typically lower than interest rates of fixed rate home loans. This typically enables you to begin with lower monthly payments.

	Reasons an ARM might be right for you:
	You are planning to move in a few years and consequently aren't concerned about possible rate increases You're confident your income will rise enough in the coming years to handle any increase in payments You want a low payment now

How ARMs work:
		A start rate, also known as the initial interest rate, gives you a special low monthly payment for a set amount of time (such as 6 months).
		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.
		How often your payments are adjusted based on the index, and how much rates and payments increase at each adjustment depends on your loan terms. A 6-month ARM adjusts every 6 months.
		At each adjustment, the new rate is computed by adding the margin — a predetermined amount that remains the same for the life of your loan-to your financial index. Example: If the interest rate for the financial index was 5.5% and your margin 2%, then your rate at the time of adjustment would be 7.5%.
		Two adjustment "caps" may put a limit on the maximum amount your rate can increase. The adjustment cap sets the maximum your rate can change during any adjustment period. The life cap sets the maximum interest rate during the life of the loan.
		Some ARMs offer a conversion feature which allows you to convert to a fixed rate loan at certain times during your loan.

Fixed period ARMs
If you're worried by the thought of your payment going up in 6 months or a year, or know exactly when you'll be ready to move to a new home, you might want to look into an ARM that protects you against the possibility of rapid interest rate increases for a set number of years.

A fixed period ARM starts with a lower rate than standard fixed rate loans. Your rate then stays the same for the first 3, 5, 7 or 10 years, depending on the fixed period ARM you choose. At the end of that period, your interest rate adjusts every year like a regular ARM according to a financial index (that's why some lenders call them 3/1, 5/1, 7/1 and 10/1 ARMs).

	Fixed period ARMs work for people who:
	Plan to be in a home for a short time Expect to gradually increase their income and want a few years at a set payment level before potentially paying more Intend to refinance before the adjustment period begins

Government Loans
The Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) offer standard refinance products. These loans have features that minimize the qualification requirements. These products allow homeowners to:
 Reduce payments
 Reduce the loan term

To get an FHA or VA loan, you apply through an approved lender like Bank of America. In fact, we are one of the top lenders for government loans. At every one of our offices, you work directly with local loan experts experienced with these loans.

FHA Loan features:

		No maximum income/earning limitations
		Fixed rate and ARM loans available
		Maximum loan amounts vary by county — contact Bank of America for information on your county
		More flexible qualification guidelines than Conventional loan
		You may be eligible to receive cash out up to 95% of your home’s value

VA Loans features:

		Qualified veterans can refinance up to $417,000
		Fixed rate loans. ARM loans also available. Ask your loan consultant for details.
		More flexible qualification guidelines than conventional loans
		For eligibility information contact Bank of America
		Work with your local loan expert for details for cash out refinance options