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Why a 10 6 Adjustable Rate Mortgage (ARM) is a Game Changer in This Market!

What is a 10 6 ARM
What is a 10 6 ARM
Brian Reese
June 8, 2023

In this blog post, we’ll explore the 10 6 Adjustable Rate Mortgage (commonly known as “10/6 ARM”), equipping potential homebuyers with critical knowledge to make informed decisions about their mortgage options.

Adjustable Rate Mortgages (ARMs) provide an alternative to traditional fixed-rate mortgages, offering flexibility and cost savings.

When it comes to financing a home purchase, the mortgage you choose plays a crucial role in your financial stability.

Okay, let’s begin!

What is an Adjustable Rate Mortgage (ARM)?

What is an Adjustable Rate Mortgage

An Adjustable Rate Mortgage (ARM) is a home loan that has a fixed mortgage rate for a certain period (the initial rate), but not the entire mortgage duration.

After the fixed period is over, the actual mortgage rate will vary based on the market rate trends.

The adjustment period varies depending on the specific ARM, and it’s important to comprehend the terms and conditions associated with each type.

ARMs are structured with an initial fixed-rate period, typically ranging from three to ten years.

Instead of a 30-year fixed or 20-year fixed or 15-year fixed, you’ll see ARM types represented by two numbers.

Common ARM types include the 5/1, 5/6, 10/1, 10/6.

The first number is the duration the initial mortgage rate will be fixed (in years).

The second number is how often the rate will change after the initial period is over (in months or years – the ‘1’ is a year while the ‘6’ is months).

For example, here’s a 10/6 ARM defined:

10 = How long the initial fixed-rate period lasts (years)
6 = How often the rate changes after the initial fixed period (months)

Click HERE for the differences between Fixed-Rate Mortgages and Adjustable Rate Mortgages!

10 6 Adjustable Rate Mortgage Explained: What is a 10 6 ARM Mortgage?

10 6 Adjustable Rate Mortgage

The 10/6 ARM, also known as the 10-year ARM, is a specific type of adjustable rate mortgage that begins with a fixed-rate period of 10 years.

Following the initial decade, the interest rate adjusts annually, resulting in potential rate changes every year thereafter.

Features and Benefits of a 10/6 ARM:

  • Initial Fixed-Rate Period: The 10-year fixed-rate period provides stability to homeowners, allowing them to enjoy a consistent monthly mortgage payment for the first decade. This period can be beneficial for those who plan to sell or refinance their home before the adjustment period begins.
  • Lower Initial Interest Rate: The introductory fixed-rate period of the 10/6 ARM usually offers lower interest rates compared to traditional 30-year fixed-rate mortgages. This can result in lower monthly mortgage payments during the initial term, providing homeowners with increased cash flow.
  • Potential for Savings: If market conditions and interest rates remain stable or decrease, the 10/6 ARM can be advantageous. Homeowners may benefit from lower interest rates during the adjustable period, resulting in reduced monthly payments.
  • Flexibility: The adjustable feature of the 10/6 ARM allows homeowners to take advantage of potential decreases in interest rates. Additionally, if homeowners plan to move or refinance before the adjustment period begins, the 10/6 ARM can provide the desired flexibility.

Considerations and Risks:

  • Interest Rate Uncertainty: One of the main risks associated with ARMs, including the 10/6 ARM, is the potential for interest rate fluctuations during the adjustment period. If interest rates increase, monthly mortgage payments could rise, potentially causing financial strain for homeowners.
  • Longer-Term Commitment: While the initial fixed-rate period provides stability, homeowners must consider their long-term plans. If they intend to stay in their home beyond the initial 10 years, they should be prepared for potential changes in monthly payments and adjust their budget accordingly.
  • Market Volatility: Economic conditions and market forces play a significant role in determining interest rates. Homebuyers considering a 10/6 ARM should evaluate their comfort level with potential rate adjustments and carefully assess the current market conditions.


Why a 10 6 ARM is a game changer when interest rates are high

Adjustable Rate Mortgages, such as the 10/6 ARM, offer flexibility and cost savings for homebuyers.

Not very many lenders offer 10/6 ARMs, and we’re proud to have access to those who do!

The main benefit of a 10/6 ARM is the long duration you’ll have with a fixed mortgage rate (10 years).

Here’s a bit more about why borrowers may prefer a 10/6 ARM: 

  • ARM rates are often lower than 30-year fixed-rate mortgages—right now 1-2% lower than fixed rates.
  • The fixed-rate period in a 10/6 ARM is longer than most other ARMs, giving the home buyer more time with a lower rate and more stability than other loans that adjust sooner.
  • Only a small number of homeowners have the same mortgage for over 10 years—when rates drop, you can refinance!
  • Could help home buyers afford higher-priced homes (if market rate is lower).

Curious About Our 10 6 Adjustable Rate Mortgage Options?


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About the Author

Brian Reese District Lending

Brian Reese is a senior advisor and co-owner at District Lending. He is one of the world’s leading experts in veteran benefits, having helped millions of veterans secure their financial future since 2013. Brian is the founder VA Claims Insider, an education-based Coaching & Consulting company whose mission is to educate and empower veterans to get the VA disability benefits they’ve earned for their honorable service. A former active-duty air force officer, Brian deployed to Afghanistan in support of Operation Enduring Freedom. He is a distinguished graduate of management of the United States Air Force Academy and earned his MBA as a National Honor Scholar from the Spears School of Business at Oklahoma State University.

In Brian’s Own Words:

“As a military veteran, I’ve made it my life’s mission to help people live happier and wealthier lives. District Lending brings this mission to life. We believe in integrity, honesty, and transparency, which is why you’ll see our rates right on our website. You’ll find lower rates and zero lending fees, which means you can buy your dream home for less. The savings are passed on to you — the way it should be.”

– Brian Reese, Advisor and Co-Owner, District Lending

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