Mortgage Depot offers a solution for this problem in the form of adjustable rate mortgages (ARMs). These mortgages allow homeowners to take advantage of low introductory rate periods that adjust according to market conditions. ARMs are a great option for people who are comfortable with taking on some risk or are planning to move in a few years.
Adjustable rate mortgages are like any other loan, but what differentiates them is that they can adjust according to market conditions. This means that when interest rates go up, the borrower's interest rate could adjust upwards as well. For this reason, ARMs usually come with lower introductory rates than fixed rate mortgages. This allows borrowers to start off paying less interest during the initial period.
The main benefit of ARMs is that you will save money on interest over the course of the loan. Since adjustable rate mortgages come with lower interest rates, you will only be required to pay back the amount borrowed as opposed to the interest that would have been charged on a fixed rate mortgage. This can add up to a significant amount of savings for those who are looking to save money on their mortgage.
Another benefit of ARMs is that they provide flexibility. When the interest rate adjusts, borrowers can take advantage of the current rate by refinancing the loan or simply continuing to make payments until the rate adjusts again.
Finally, ARMs are a great option for those who are looking to move within the next few years. Since the interest rate of an ARM is based on the market, you don’t have to worry about the rate increasing too quickly and becoming unaffordable. Furthermore, if interest rates drop, you may be able to take advantage of the lower rate and save even more money.
In conclusion, adjustable rate mortgages offer a great solution for people looking to save money on their mortgage and those who plan to move in the near future. The low introductory rates, flexibility, and potential to save money make ARMs an attractive option. While ARMs do come with some risk, they are still a strong choice for those who are comfortable taking on a bit of risk.
This article was contributed on Oct 20, 2023