Considering an ARM? Why you should or shouldn’t consider an ARM (Adjustable Rate Mortgage.)

Adjustable rate mortgages (ARMs) are perfect for some borrowers because ARMs provide a low interest rate for an initial payment period, making the initial monthly payments less than those a fixed-rate mortgage usually offers.

Adjustable rate mortgages acquired a bad reputation during the subprime mortgage crises and in many cases rightly so. But with new, stricter Regulation Z guidelines in place, ARMS are making a comeback, and may be a viable option for many borrowers.

Why would an ARM be a good option for you? It would be a good option if you plan to own your home only for a few years. The amount of interest saved with the lower rate could be substantial.

When would an ARM be the wrong choice? When you plan to own your home for 10 years or more or if you are risk averse. Also, if you could not afford the maximum interest rate change that could result when the ARM adjusts.

As always, it is important that you work with a lender that will assist you in carefully selecting the best product to match your financial situation.

The above is a Mortgage Minute by Dan Murtaugh of Sandy Spring Bank. If you are interested in discovering the best mortgage solution for you, feel free to contact him. He and Sandy Spring Bank have many different mortgage types and options!

Thank you for this post about ARM loans, Dan!


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