Whether or not an adjustable-rate mortgage (ARM) is right for you depends on your individual circumstances and financial goals. Here are some things to consider:
Your plans for the home. If you plan to sell the home within the next few years, or if you plan to refinance the mortgage before the introductory period ends, an ARM may be a good option for you. This is because ARMs typically have lower introductory interest rates than fixed-rate mortgages, which can save you money on your monthly payments.
Your risk tolerance. ARMs are riskier than fixed-rate mortgages because your interest rate can fluctuate over time. If you are uncomfortable with the idea of your monthly payments going up, an ARM may not be the right choice.
Your financial situation. If you have a tight budget, or if you are not sure if you will be able to afford higher monthly payments in the future, an ARM may not be a good option for you.
Here are some specific situations where an ARM may be a good fit:
You are buying a starter home and plan to move up to a larger home in a few years.
You are planning to refinance your mortgage before the introductory period ends.
You have a stable income and can afford higher monthly payments if interest rates rise.
You have a low down payment and need a lower initial monthly payment.
Here at Polaris Home Funding, we are here to help you understand the terms of the loan, including the introductory interest rate, the adjustment period, and the lifetime caps on interest rates and monthly payments.
Questions? Contact us today to see whether or not an ARM is right for you.