For homeowners looking to maximize their savings when refinancing their mortgage, adjustable rates are an attractive option. Adjustable-rate mortgages (ARMs) offer a variety of features that can make them attractive to borrowers. Typically, ARMs begin with lower initial interest rates than fixed-rate mortgages, allowing homeowners to pay lower monthly payments in the short term.

The primary advantage of an adjustable rate mortgage (ARM) is that it offers a low initial interest rate that typically remains the same for the first few years of the loan. As the name implies, the rate can be adjusted periodically, typically up or down, to reflect changing market conditions. This periodic adjustment of the loan can result in significant savings over the life of the loan.

Another key advantage of an ARM is that they tend to offer more flexibility than fixed-rate mortgages. For example, ARM loans often allow homeowners to change the length of their loan, making them ideal for those who anticipate needing to move or refinance sooner than later. Flexible payment options can also be available, allowing borrowers to make payments that better fit their budget.

Additionally, adjustable rates lenders often allow borrowers to take advantage of lower interest rates by skipping payments or making interest-only payments for a designated period. This can be especially beneficial for people facing short-term financial hardships, such as those caused by job loss or other circumstance.

Adjustable-rate mortgages are not for everyone and borrowers must carefully consider if an ARM is the right choice for their situation. For example, some people may be uncomfortable with the uncertainty of having a mortgage rate that can change periodically. These borrowers should carefully consider fixed-rate mortgages instead.

Overall, for borrowers that understand and can manage the risks associated with ARMs, adjustable rates can be an attractive option in 2020. By reducing initial payments and offering greater flexibility, adjustable rates can be a great way for borrowers to save money in the long run.