![]() ![]() If you’re buying your first house and don’t plan on staying long-term, an ARM loan can be a more affordable way to buy a home, without worrying about future interest rate adjustments. In summary, adjustable-rate mortgages can be a good option for various situations. You can always refinance into a fixed-rate mortgage.May be easier to qualify for than a fixed-rate mortgage.If average rates fall, your interest rate will also be lowered at the next adjustment period.Lower initial payments can help you qualify for a larger mortgage.Lower interest costs than a fixed-rate mortgage for at least the first 3, 5, or 7 years.Is an ARM loan right for you? Consider the potential benefits: If you want to take advantage of lower interest rates with a fixed-rate mortgage, you must refinance, which comes with closing costs. You get a lower-than-average introductory fixed rate if rates fall in the future, your rate will adjust accordingly. However, they are an attractive option when average mortgage rates are higher. The intro rate usually lasts for several years before the first adjustment occurs.ĪRMs are more complicated than conventional fixed-rate mortgages. ARM loans usually come with a fixed intro rate at the start of the loan that is lower than current fixed mortgage interest rates. Here’s what you need to know about adjustable-rate mortgages.Īdjustable-rate mortgages are a type of home loan in which the interest rate can adjust up or down on a pre-determined schedule. Historically, the 30-year fixed-rate mortgage is the most popular option among homebuyers, but ARMs can be an attractive option when average rates are high, as they are right now. Adjustable-Rate Mortgages (ARMs)ĪRM loans have been around since the 1980s. ![]() fixed-rate mortgages: the similarities and differences, benefits, when to choose one or the other, and when it might make sense to switch from an ARM to a fixed-rate loan or vice versa. In this article, we’ll cover everything you need to know about ARM loans vs. One of the biggest mortgage loan choices is deciding between a fixed or adjustable interest rate. ![]()
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