They usually offer lower interest rates than fixed rate mortgages, but can adjust upward if interest rates go up. There is a predefined cap which defines how high the interest rate can adjust. Adjustable rate mortgages are advantageous for those who do not plan to stay in their home for a long time, for those borrowers who do not qualify at higher fixed interest rates, and those who can financially handle fluctuating payments. APR is the cost of credit as a yearly figure based on all finance charges paid by the borrower amortized over the life of the loan. Permanent mortgage investors invest money on a yield basis.
Yield is a combination of interest rate and points collected.
Therefore, the borrower has a choice of a higher interest rate and less points or a lower interest rate. The bank doesn't care which election is chosen, as they both give a comparable yield on the mortgage investment. It's probably less than you think. Many first-time buyers are surprised to learn there are no set answers to this question. Generally, though, your down payment can be anywhere from three to twenty percent of the home's value.