Question:

What is an adjustable rate mortgage and should I take one?

Answer:

Often first time homebuyers are not well educated about the variety of mortgage loans and few will know what is an adjustable rate mortgage and how they work.

An adjustable rate mortgage is a mortgage loan that starts with a very nice low rate for limited time. During this fixed period, borrowers also have the option to make regular payments of principal and interest, interest-only payment, or a minimum payment that leads to negative amortization.

It is not recommended for first time homebuyers to jump into the muddy waters of ARMs. Sometimes, borrowers will not understand that they have agreed at closing to a Neg Am adjustable rate mortgage and have $400 added monthly to the principal, which would terrify them later.

To avoid this happening to you, please, talk to a loan officer about adjustable rate mortgages, your budget and housing needs to determine if you could possibly benefit from an adjustable rate mortgage.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: