Have you ever wondered what an ARM mortgage is? In today’s blog we are going to explain what an ARM mortgage is and how it affects aspiring home owners in San Diego.
ARM mortgage loans are adjustable-rate mortgage loans. These loans adjust over a set period of time. As time goes on the interest rate on your mortgage may change.
What are the advantages and disadvantages?
The starter interest rates are usually adjustable mortgage rates. This means that you can have lower monthly payments. This can be advantageous if you are only planning on living in your house for a short period of time.
10/1 ARM: Your interest rate is set for 10 years then adjusts for 20 years.
7/1 ARM: Your interest rate is set for 7 years then adjusts for 23 years.
5/1 ARM: Your interest rate is set for 5 years then adjusts for 25 years.
3/1 ARM: Your interest rate is set for 3 years then adjusts for 27 years.
The downfall to an ARM mortgage is that your mortgage payments will become more expensive overtime. If the amount of money that you make does not increase this may cause some stress.
ARMS are usually considered to be risky because chances are your rate will go up when the fixed rate period ends.
If you are still confused about the possible benefits to ARM mortgage loans then you should speak to your broker. They will help you to determine if a ARM mortgage loan is right for you.