Real Estate Terms Defined - ARM or Adjustable Rate Mortgage

 

So you say you wanna buy a house and your lender pitches an adjustable rate mortgage or ARM. What the heck does that mean?? 🤔Should you do it?? 🤔🤔🤔

An adjustable rate mortgage or ARM is a home loan with an interest rate they can change periodically. This means that the monthly payments can go up or down. Generally the initial interest rate is lower than that of a comparable fixed rate mortgage. After the period ends interest rates and your monthly payments can go lower or higher. 

So is it right for you? I can’t say but I can give you some pros and cons:

PROS:🤗
📌 they often have a lower interest rates than fixed rate mortgages
📌 A lower rate means you might be able to pay more principal every month
📌 rates could go down later lowering your payment

CONS:👿
❌ rates can rise overtime increasing your payment
❌ your monthly payment can and most likely will fluctuate
❌ you don’t know what your financial situation will be when rates change.

If you’re considering buying or selling a home or if you just have real estate or loan questions, please give me a call at 702-328-4583