Decoding Adjustable-Rate Mortgages (ARMs) for a Smart Move!
Ever wondered how ARMs work? Here’s how: An ARM is a mortgage with a variable interest rate, offering flexibility in payments over time. Unlike fixed-rate mortgages, ARMs change periodically, keeping things interesting.
Pros of ARMs:
– Low Initial Fixed Rate: Start with a budget-friendly fixed rate.
– Lower Payments: Initial lower rates mean more savings.
– Rate Caps: Limits on rate increases provide security
Cons of ARMs:
– Interest Rate Risks: Rates can rise, affecting monthly payments.
– Limited Availability: Not all lenders offer ARMs, limiting choices.
– Budgeting Challenges: Predicting changes can be tricky, affecting budgeting.