What is a 7 year adjustable rate mortgage?

7 year adjustable rate mortgage is a home loan with a fixed interest rate for the initial seven years of the loan. In the eighth year, the interest rate will either increase or decrease annually. The change is determined on the prime rate index. Due to the fluctuating nature of the seven year adjustable rate mortgage, a cap structure is put in place to prevent large increases to the loan payment. The cap structure will define the interest rate during the initial seven year period.

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