The Advantages and Disadvantages of ARMs

When considering financing options for a new home purchase or a refinance, one should consider the advantages and disadvantages of securing an adjustable-rate mortgage (ARM) as opposed to a fixed-rate mortgage. During the housing boom, ARMs were a preferred financial product for many buyers who intended to sell their homes before their interest rates began to rise. However, once the housing and finance crisis struck the American economy, buyers lost interest in the product.

Although “ARMs typically offer buyers a lower rate for a set period of years, after which rates rise or drop each year, depending on prevailing interest rates,” there are important factors to take into consideration before signing ARM loan documents.  So, how do you know if an ARM is the best option for your financing needs?

Share this article: