Thursday, October 27, 2022 / by Steve Ticknor
Is an Adjustable-Rate Mortgage a Good Option for Me?
For the past few years, interest rates hit historical lows. Unfortunately, that is no longer case. We keep seeing rates go up, up, and UP! With the lower rates, financial experts suggested that a fixed-rate mortgage was the better option for home buyers. However, that may no longer be the case. How do you know whether to choose a fixed-rate (FRM) or an adjustable-rate mortgage (ARM) when it comes to your home loan options?
Adjustable-Rate Mortgage for the Home Buyer
How Does an ARM Work?
Unlike fixed-rate mortgage loans, the interest rate on an adjustable-rate mortgage fluctuates over time. Initially, it starts out lower than a fixed-rate mortgage. For example, Freddie Mac shows the average 30-year FRM at 7.08% as of the writing of this post. However, they show the ARM at 5.96%. On a $400,000 mortgage, that means a difference of almost $300 a month ($3600 in the first year). But this will not always be the case. The rate may go up or down.
For a set period of time (usually the fi. ...
Adjustable-Rate Mortgage for the Home Buyer
How Does an ARM Work?
Unlike fixed-rate mortgage loans, the interest rate on an adjustable-rate mortgage fluctuates over time. Initially, it starts out lower than a fixed-rate mortgage. For example, Freddie Mac shows the average 30-year FRM at 7.08% as of the writing of this post. However, they show the ARM at 5.96%. On a $400,000 mortgage, that means a difference of almost $300 a month ($3600 in the first year). But this will not always be the case. The rate may go up or down.
For a set period of time (usually the fi. ...
