What you should know about Adjustable Rate Mortgages

Buying a home since 2020 has been a challenge for homebuyers, and we've seen a lot of creativity come from this changing market.

Lately, with the rising interest rates, homebuyers have had to look into more creative lending solutions. As a result, we ave seen Adjustable Rate Mortgages coming back into the market.

An Adjustable Rate Mortgages (ARM) is a great way to lower your monthly payment through a lower interest rate. These are traditionally shorter-term loans that begin at a lower rate and increase after a specific term (think fixed-rate for the first 5, 7, or 10 years, and then it can fluctuate every year after that, to an extent).

If you plan on living in your home for a shorter period, or plan to make improvements and refinance, it might make sense for you to explore an ARM.

For example, a 10-year ARM has a fixed rate for the first 10 years and increases by a certain amount thereafter, up to a certain percentage increase/cap. Compare a 10-year ARM at 10% down with a 30-year fixed-rate mortgage at 20% down - you may get a similar payment, with less cash needed at settlement.

Keep in mind your credit score will always determine your interest rate.

Be sure to talk to a lender about your specific goals to see what makes the most sense for your lifestyle. We know several great mortgage lenders who would love to run through different scenarios and loan estimates so that you have a true understanding of what options you actually have.