Types of Standard ARMs
ARMs with different indexes are available for purchases and refinances. The interest rate and monthly payments varies on the change made on the index rate.
6-Month Certificate of Deposit (CD) ARMThis program has a maximum interest rate adjustment of 1% every six months. This CD index usually reacts quickly to changes in the market.
6-Month Treasury Average ARMLike the 6-Month CD ARM, this program has a maximum interest rate adjustment of 1% every six months. This program reacts slowly to the rapid changes in the market, therefore causes adjustments in the ARM interest rate to lag behind in some other market indicators.
12-Month Treasury Average ARMThis program has a maximum interest rate adjustment of 2% every 12 months. The Treasury Average reacts slowly to market fluctuation, therefore the ARM interest rate will lag behind some other market indicators.
1-Year Treasury Spot ARMThis program has a maximum adjustment of 2% every 12 months. This program reacts slower than CD index but faster than Treasury Average.