Adjustable Rate Mortgage (ARM) – The “Let’s Gamble” Loan
With an ARM, your interest rate starts low, but it can change over time based on the market. The first few years are usually fixed, then it adjusts (aka, could go up or down). Great if you plan to sell or refinance before the rate adjusts.
Best for: Buyers who don’t plan to stay long-term and want lower initial payments.
- Pros:
- Lower initial interest rate than a fixed mortgage
- Can save money if you sell or refinance before the adjustment period
- Cons:
- Interest rate can increase after the fixed period ends
- Unpredictable monthly payments after the adjustment