If I get an adjustable rate mortgage, is there a limit as to how high it can adjust upwards?

Yes.. All adjustable rates have a "fixed" period, where the rate does not change.. Them there's the first adjustment period, which allows the rate to increase (based on the index it's attached to), but has a maximum first adjustment cap.. then it can change every year after, but also has an "annual cap", and then there is also a "LIfetime Cap", where regardless of the index, it cannot go higher than that cap. Example a 5/1 ARM with Caps at 2/2/6 means.. Fixed rate for the first 5 years, and adjusts every 1 year there after (5/1ARM).. Caps (2/2/6).. the maximum adjustment in the 6th year is 2%, the rate can go up a maximum of 2% each year there after, but can never be more than 6% over the initial start rate. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

There are limits. Find a qualified and recommended mortgage professional in your area to meet with so they can discuss all of the options of adjustable rate mortgages available to you. There are many indexes, terms etc, so meeting with a qualified person to thoroughly explain the ARM's is advisable. If you are drawn to the ARM because of the initial rate, and are not going to reside very long in the home, not a bad choice. If you are planning on staying in the home long term, try and take advantage of the very low interest rates with a fixed FHA loan 30 year repayment schedule, or go out further if available to 40 years. Best of luck Sara!Best of luck

You need to ask your Loan Officer the terms. Typically adjustible loans are displayed with numbers looking like this 5/25. or maybe 1/1/5 or something like that. The first number is the maximum allowable interest change the first time it can change, The second number is the maximum it can change (up or down) every year thereafter, and the last number is the maximum highest it can ever go above where it started. These adjustments are next tied to an index, and a margin. So maybe the loan is tied to LIBOR with a magin of 2.75%. SO any future adjustments are based on whatever LIBOR is when it adjusts plus your margin to equal the new rate - subjust to the caps above.