Interest rates are starting to rise, and with already high home prices, many buyers count themselves out of being able to buy a home. But don’t walk away so quickly!
Here comes the fun part! Let’s look at how you can save money with an ARM.
The low interest rate of your ARM may help you build equity faster. A lower interest rate means you’re paying more towards your principal. That means that you’ll have more equity in your home compared to if you had financed with a fixed-rate loan with a higher interest rate.
Rates can decrease with market shifts, and if they go down, so will your monthly payments. Opponents of ARMs usually highlight that rates will increase during your adjustment intervals, but rates fluctuate with the economy and market conditions. As we’ve seen in the past couple of years, rates can also go down dramatically. And if they go down at your rate adjustment interval, that will result in savings to you.
Consider the amount of time you’ll most likely live in this home. If you’re buying your forever home, you might still be better off to finance with an ARM, but you may consider refinancing after the fixed-rate period. But, if this is your first home, or you might move to another city or house during that initial rate period, you’ll most likely be better off utilizing an ARM than a comparable fixed-rate loan.
Source:https://fhmtg.com/2022/03/10/should-you-finance-with-an-adjustable-rate-mortgage/#3-how-an-arm-saves-you-money
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