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Adjustable Rate Mortgage (ARM)

If you have assets and investments that will back up your finances, you might decide to get an adjustable rate mortgage. An ARM (adjustable rate mortgage) is one that some people really love, and others really don’t love! When you read on and understand more about this type of mortgage, you will be able to decide if it is the right way to go for you in buying a home.  


There are different things to know when you are thinking about getting an ARM, such as how long the rate will be able to stick before it starts to adjust, and also how long you will have the mortgage. There are ARMs that are 15 years, 20 years, or 30 years, adjusting every 3 years, 5 years, or 10 years. If you are going through mortgage refinancing with an original ARM, the new loan life will extend over the life of your ARM, giving you possibly lower payments. Also, some adjustable rate mortgages will adjust every month, and others will not, so be sure you know how often they adjust. The reason why an adjustable rate mortgage is an attractive option for a lot of home buyers is because of the interest rate that is much lower than a fixed rate mortgage. On the other hand, if the rates go up, your mortgage might adjust, and your rates might become higher than you would have had if you went with a fixed rate mortgage in the first place. 


There are a lot of people who might just want a monthly payment, set in stone, that will be the same for as long as they have the loan, giving them a sense of security. If you do not plan on living in the home for a super long time, and you might want to sell after a few years, an ARM might be the way to go. While you are in the home, your payments will be very low, and then you can pay it off when you sell it! This is a great option for people who are looking for a great investment opportunity. If you have to get a bad credit mortgage, you should carefully ask questions and read the terms and conditions so that you really understand what you are doing. Whether you are getting a mortgage refinance or buying a new home, you will not want to get an ARM if you plan to be in the home for longer than five years because it would just probably not be very practical.