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Adjustable rate mortgages are loans with interest rates that adjust periodically over the life of the loan. They usually begin with a fixed period of time where the rate is set, such as five or seven years. After that initial period, the rate can adjust annually or even more frequently based on market conditions.
ARMs have a lower initial interest rate compared to fixed-rate mortgages, which can make them an attractive option for homebuyers looking to save on monthly payments. However, the tradeoff is that rates can go up or down over the life of the loan, which can lead to uncertainty about future payments.
Adjustable rate mortgages have both advantages and disadvantages. Here are some key things to consider:
Adjustable rate mortgages are a good option for homebuyers who plan to live in their home for a shorter period of time, or for those who anticipate an increase in income over the life of the loan. However, they may not be the best choice for those who are on a fixed income, or who plan to stay in their home for a longer period of time.
If you’re interested in learning more about adjustable rate mortgage home loans, Mortgages by Scott is here to help. Our team of experienced mortgage brokers can help you navigate the home loan process and find the best financing options for your unique situation. Contact us today to learn more.
