An arm, or an adjustable rate mortgage, is a great option, for the home buyer who is looking to pay a lower interest rate at the beginning of their loan. An arm is an excellent choice for financing under certain conditions, such as rising income expectations, high interest rates, and short term ownership. But with this type of mortgage, there are some risks involved. With an arm mortgage, you can be sure your interest rate will change periodically. The index rate and monthly payment are likely to change yearly, or every three or five years. If the index rate moves up, so will your mortgage and monthly payments. If the index rate moves down, so will your monthly payments. Before deciding whether an arm loan is best for you, consider whether you'll be able to afford a higher payment, and how long you plan on owning the home. Will you be taking on any sizable debts in the near future? It's important to consider all of these factors before making your final decision.
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