Adjustable Rate Mortgages
Adjustable rates are typically lower than fixed rates when the loan is initially established. ARMs may adjust on a monthly basis in keeping with the Federal Reserve or on a bi-annual or annual basis. The consumer should be aware that as interest rates increase, so will their monthly payments. While ARMs may be appealing because the initial rates are lower, ARMs can also be a gamble. ARMs may be beneficial to investors or consumers who only plan to keep the loan for a short period of time. During that time, the consumer can enjoy low interest rates.