Adjustable Rate Mortgages (ARM) are designed for those individuals who aren’t planning on staying in their home for more than seven years. It is also designed for those who are anticipating an increase in their income later on down the line. 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. Then, they are 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 expect a hike in their income.
With an adjustable rate mortgage loan, 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 go even less, meaning that your monthly payment could go less than what it already was. However, the interest rate can 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. Priority Financial Network can go over all of the specifics to help you determine if your finances and situation are going to be able to accommodate this particular type of loan.