When you are weighing your options regarding mortgages, some experts will give you a piece of advice that go for Adjustable Rate Mortgage (ARM). Now, it is your job to research the term and apply it on your situation to see if ARM is the best solution for you or not.
There is no hard and fast rule that will determine if Adjustable Rate Mortgage is right or wrong. There is no need to confuse yourself with too much jargon; instead you should clarify your understanding regarding the basics only.
Holden Lewis is explaining the basics of Adjustable Rate Mortgage in this post:
Adjustable-rate mortgage: Just the basics
By Holden Lewis
Adjustable-rate mortgages, or ARMs, have monthly payments that can move up and down as interest rates fluctuate.
Most have an initial fixed-rate period during which the borrower’s rate doesn’t change, followed by a longer period during which the rate changes at preset intervals.
What is an adjustable-rate mortgage?
An adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down.
Now that you have understood the basics, now is the right time to dig a little deeper into the details.
Caleb at SavingThousands is explaining ARM terms a little more for you:
Adjustable Rate Mortgage: A Closer Look at ARM Loans
Should You Get an Adjustable Rate Mortgage?
A lot of people have heard the phrase adjustable rate mortgage or ARM. But what is an adjustable rate mortgage? Are there advantages in having investment rate mortgage? And are there disadvantages?
Financial expert Robert Palmer, host of Saving Thousands, explains that an adjustable rate mortgage is one that may see changes in interest rates over time. The interest rates are tied to various financial markets around the world.
Having developed a clearer understanding of Adjustable Rate Mortgage, now let us watch this video by Bank of America to compare Adjustable Rate Mortgage with Fixed Rate Mortgage:
You should also pay heed to the commonly used indexes in ARM to better understand your mortgage options.