Adjustable Rate Mortgages (ARM) are designed for those individuals who aren’t planning on staying in their home for more than seven years.
Adjustable Rate Mortgages
In addition to being well suited to borrowers who are planning to stay in their homes for less than seven years, ARMs are also a great option for borrowers who anticipate an increase in their income in the future. Because these loans have a monthly payment that can fluctuate from one month to the next with the changing interest rate, they aren’t designed for everyone. However, they often come with an initial period where the interest rate doesn’t change, followed by an extended period of time where the rates fluctuate at preset intervals. Because of this, they are best for those who don’t plan on staying in the home for long or for those who expect an increase in their income.
With an adjustable rate mortgage, the interest rate starts out far lower than that of a fixed rate mortgage. This can help you save money on the cost of your mortgage each month, which is great for those just starting out with their first home. After the initial fixed rate period is over, there is a chance that the interest rate could decrease, meaning that your monthly payment could decrease as well; however, the interest rate could also increase, causing your monthly payment to increase.
Because the interest rates can vary so widely, you need to spend time speaking with your Loan Officer to determine if this is the right loan for you. Bravo Mortgage can go over all of the specifics to help you determine whether this particular type of loan is best suited to your situationand finances.
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