Broken down to basics, all mortgages fall into two categories; fixed interest rate and adjustable interest rate(ARM). Each has its pros and cons, benefits depend on the buyer. While many people are currently opting for fixed-rate mortgages, ARM’s can be extremely beneficial for many homebuyers.
- Lower Starting Costs
- Lower Starting rate than fixed mortgages
- Often easier to qualify since rates and initial payments are lower. If rates rise, so can your ARM interest rate at set intervals.
- All ARMs have caps that prevent the rate from going over a certain amount
- Some programs start out with a fixed-rate period (3year, 5year, 7year)
- Interest-only ARMs are also available, perfect choice for borrowers who plan to spend a short period of time in the home
If you’re looking for smaller monthly payments and lower qualifying requirements or you plan to be in your home for a short period of time and ARM may be just what you’re looking for!
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