Adjustable Rate Mortgage
An ARM is a type of mortgage that has an interest rate that may change over time, but is initially fixed for a period of 5, 7, or 10 years. The initial rate is often times lower then a fixed rate mortgage, but they have the potential to rise or dip in the future.
When an ARM is a good idea:
If you plan to refinance to a fixed rate before the first adjustment.
You consider your house a starter home and plan on moving before the first adjustment.
You plan on making extra payments to pay off the loan faster.
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