Is an Adjustable Rate Mortgage Right For You?

With interest rates on the rise in recent months and high home prices, some buyers have turned to adjustable-rate mortgages (ARMs) in an attempt to (temporarily) lower their monthly housing payment. What should you know before considering an ARM?

Adjustable-rate mortgages typically start out with a lower-than-average interest rate, and then “adjust” to a higher or lower rate after a set period of time. A 5/1 ARM, for example, changes its interest rate once a year after five years. ARMs can be attractive because borrowers will initially have a lower monthly mortgage payment than they would with a traditional 30-year fixed-rate mortgage.