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An adjustable rate mortgage, or ARM, is a mortgage rate that adjusts with the current market rates. Although this may not be the safest option, it has a rate that is always two or three percent lower than a fixed rate mortgage. Within the adjustable rate mortgage you can choose specific types, such as choosing a mortgage rate that is fixed for a whole year, but the next year will adjust depending on the market conditions. It adjusts year to year, rather than month to month. A few other adjustable rate mortgage types are the CD's and the Treasury ARMs. CD's, or certificates of deposit, have a maximum interest rate of one percent every six months, meaning that if the market were to rise by two percent in six months, the CD will require you to only go up one percent rather than two. The CD also reacts exactly with the market rates. The other type is the Treasury Average and Spot ARM. These work slower that the CD, therefore giving you time to react to the market. Ask you mortgage professionals at Tucson Arizona Mortgage.com for more information regarding mortgage types and various rates.
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