Question:

Should I go for a 10 year adjustable rate mortgage (10 year ARM) instead of FRM?

Answer:

A 10 year adjustable rate mortgage (10 year ARM) is a more stable ARM. While you have those low intro rates locked in for a quite long period of time, you have enough time to decide whether you will refinance to a fixed-rate, or stay with it after the fixed term expires.

Advantages of a 10 Year Adjustable Rate Mortgage (ARM) over Long Term FRMs

With a 10 year adjustable rate mortgage (10 year ARM) you get better rates than with a 30 or 40 year FRM.

ARMs are usually assumable in case you decide to get an already mortgaged property. 10 year adjustable rate mortgages (10 year ARMs) are usually offered with a 5/2/5 cap which means after 10 years you will get at most 5% up or down initial adjustment; then each year the rate will adjust annually at most 2%, and 5% is the lifetime cap of the loan.

To put it shortly, 10 years are a long way to go. When signing the contract, you'd better negotiate the prepayment penalty and refinancing restrictions so that you have the freedom to choose what to do with the 10 year adjustable rate mortgage when the nice low rate 10 year period expires.

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Common misspellings: mortage and morgage