An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down throughout the life of the loan.
The key benefit is that the starting interest rate is typically lower on an ARM than a fixed-rate mortgage.
Thinking of moving or refinancing within a few years? If you are planning to sell the home before the initial fixed-rate period of your ARM expires, you can take advantage of the lower initial rate and mortgage payments while you live in the home, and then sell or refinance before it’s time for the rate to change.
Buying a starter home? An ARM may be something to look into. Thanks to the lower initial interest rate of ARM, you’ll save a bit on your monthly mortgage payments. You can sell the home before your fixed-rate period ends and roll those savings into your move-up home.
Flipping a fixer-upper? ARMs can be a smart option if you’re buying an investment property with the intention of flipping or selling as soon as renovations are complete. If you’re able to sell the home before your rate adjusts, the lower mortgage payments during your ARM’s initial fixed-rate period will be less impactful on your profit margin.
Find an extended initial fixed-rate period? A major benefit of programs with an extended initial fixed-rate period, like FHM’s 15/1 ARM, is the ability to have stable, predictable payments for half the length of your loan term while taking advantage of the lower introductory interest rate.
Source:https://bit.ly/3jwROXJ
Comments(0)