Are you in the market for a new home? Considering an adjustable rate mortgage (ARM) may be the route to take. An adjustable rate mortgage can offer flexibility, a lower interest rate, and a lower monthly payment. A well-structured ARM can provide a great benefit to prospective homebuyers.

When considering an adjustable rate mortgage, it is important to understand the pros and cons associated with this type of loan. Generally, most adjustable rate mortgages have an initial fixed-rate period followed by a period with adjustments depending on the market rate. During the initial fixed-rate period, the interest rate is locked for a specific period. This can provide a great deal of stability, ease of planning, and affordability. Once the initial fixed-rate period ends, the interest rate may adjust to be higher or lower.

The main benefit of an adjustable rate mortgage is the flexibility it offers for those that plan on residing at the property for a short period or those that plan on refinancing the loan within the initial fixed-rate period. This can mean a lower monthly payment and a lower overall interest rate. Furthermore, depending on the market conditions, a borrower may also take advantage of the lower interest rates when they adjust.