What is an Adjustable Rate Mortgage?
An Adjustable-rate mortgage is often referred to as an ARM. The adjustable rate mortgage feature an interest rate that undergoes scheduled adjustments, usually annually. The rate fluctuates based on economic conditions, with the potential for increases or decreases. ARMs often start with a low introductory rate, leading to more budget-friendly monthly mortgage payments in the initial period.
Who Benefits from an ARM Mortgage?
This loan type, with its interest rate adjusting after the initial five to ten years, appeals to individuals intending to sell their homes and relocate before the rate potentially rises to higher levels.
An adjustable-rate mortgage (ARM) is a housing loan featuring an interest rate that may vary periodically, contingent on the performance of a designated benchmark. ARMs are alternatively referred to as variable rate or floating mortgages. Typically, these ARM loans have caps that impose restrictions on the annual or overall increases in interest rates and/or payments. Opting for an ARM can be a prudent financial decision for homebuyers intending to retain the loan for a limited duration and can manage potential increases in their interest rates.
Is the Home Equity Line Considered an Adjustable Rate Loan?
Yes, the HELOC features a variable interest rate which can adjust periodically, so it is considered an adjustable rate mortgage.
Learn More About the Pros and Cons of Adjustable Rate Mortgages
Are you afraid that you might have missed out on the era of low interest rates? They’re still historically low, and the time is now to remodel your kitchen, consolidate high-interest debts, or finally fund that dream vacation for your family. Hurry before it’s too late, and rates return to normal!
Adjustable Mortgage Rates remain fixed for a specific period of time and then begin to adjust periodically. This can be a great option for borrowers who feel that interest rates may decrease or that are planning to live in their home for less than five years.
We can help you decide which loan is the right one for your specific situation.
Home Equity Mart is a national leader for finding both fixed and adjustable mortgage rates. HEM is dedicated to making sure that your lending experience is as timely and enjoyable as possible. Research our website to learn everything you need to know about mortgage terms. Let us help you realize your housing dreams now, and be on the way to financial freedom!