Adjustable rate mortgages (ARMs) offer numerous benefits over fixed-rate mortgages. For borrowers who understand the risks and have a plan in place to capitalize on potential rate movements, an ARM can be an excellent choice.

One of the biggest benefits of an ARM is a lower initial rate. ARMs are typically offered with a rate discount of around 0.5 to 1 percent in the first year, allowing borrowers to save on their monthly payment. This provides an additional cushion for people who may be stretching on their budget due to other debts or living expenses.

ARMs also provide greater flexibility with payment timing. With most ARM products, borrowers have the option to choose when their payments are due each month. This can be especially helpful for individuals looking to pay their mortgage earlier in the month to better match their paychecks.

Since ARMs are tied to an index that fluctuates over time, borrowers can benefit from rate drops if the market moves in their favor. Although interest rates are currently quite low, an ARM could be an attractive option for borrowers in the future who anticipate rates increasing. If this happens, borrowers with ARMs can benefit from lower payments when rates drop, while those with a fixed-rate