Adjustable-Rate Mortgage (ARM) Cash-Out Refinance

What is a cash-out refinance?

In simple terms, a cash-out refinance replaces your current mortgage with another loan that: 

• Pays off your current mortgage balance
• Uses your home equity to provide additional funds for other purposes

Adjustable-rate mortgage

Features 

• Your interest rate and monthly principal and interest (P&I) payments remain the same for a defined initial period, then adjust annually when that initial period is over. 
• Loans available in a variety of longer terms. 
• Includes an interest rate cap that sets a limit on how high or low your interest rate can go at each rate adjustment. 

Benefits 

• Typically ARMs have a lower initial interest rate than the rate on a fixed-rate mortgage. 
• The interest rate cap limits the maximum amount your P&I payment may increase or decrease at each interest rate adjustment and over the life of the loan. 
• May provide flexibility if you expect future income growth or are comfortable with an interest rate and payment that will change. 

Considerations 

• Monthly principal and interest payments may increase or decrease when the interest rate adjusts. 
• Your monthly principal and interest payments may change every year after the initial fixed period is over.

To help you determine whether a cash-out refinance can help you with your long-term financial goals, contact your home mortgage consultant.

If you are a service member on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the relief you may be eligible for under the Servicemembers Civil Relief Act or applicable state law.