Purchase with an Adjustable-Rate Mortgage
An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that adjusts over time based on the market. This contrasts a fixed-rate mortgage which retains the same interest rate for the life of the loan. The interest rate for an ARM is not permanently fixed for the entire loan life.
Initially, the payments are lower than a traditional mortgage, but the lower rates are temporary. After the initial period, generally 5, 7, or 10 years, the rates will fluctuate with the housing market.
Those initial low monthly payments allow some wiggle room to put more toward your principal loan balance each month. This loan is a great option when current interest rates are higher than typical. They leave room for more affordable mortgage payments. It is important to consider your financial capabilities in the long run rather than focusing on the up-front payments.
This is a good mortgage option for those planning to move within the initial loan period or hope to refinance later. It can also save money but should only be considered by those with a strong and consistently reliable cash flow, due to the changing nature of the loan.
If you think an Adjustable-Rate Mortgage may be right for you, contact one of our loan officers today! They would love to help you take the next steps.
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