The Loan Estimate tells you in multiple places whether the loan is an adjustable-rate mortgage, or ARM.
On Page 1, the “Loan Terms” section provides basic information about the ARM’s features:
The initial interest rate.
How often the interest rate will be adjusted.
How high the interest rate can go and when it can reach the maximum.
On Page 2, you will find 2 tables that provide detailed information about the ARM:
The “Adjustable-Interest Rate (AIR) Table” describes the index and margin, initial interest rate, the lifetime caps on interest rates, the timing of rate adjustments, and periodic caps.
The “Adjustable-Payment (AP) Table” describes whether the loan allows interest-only payments and other exotic payment features. It describes the minimum and maximum principal-and-interest payment after the 1st adjustment, and the maximum possible principal-and-interest payment if the interest rate maxes out.
A rate lock guarantees that the lender will offer you a specific combination of interest rate, points and lender credit for the mortgage. A lock lasts for a limited time, and then it expires.
The Loan Estimate tells you whether the rate has been locked, and for how long. This information is found near the top of Page 1:
If the “no” box is checked, then you have not locked an interest rate. In mortgage lingo, you are “floating” the rate. While you are floating, interest rates could move up or down, responding to market forces. These fluctuations could cause your potential mortgage rate and monthly payments to move up and down, too.
If the “yes” box is checked, then your interest rate is locked. The rate lock’s expiration date will be printed here.