By EquityPoint Real Estate
In 2015 one of the most common mortgage options is also one of the most controversial.
The Adjustable Rate Mortgage (ARM) is a mortgage that offers homeowners the unique opportunity to have a less expensive mortgage loan IF mortgage interest rates fall but, an Adjustable Rate Mortgage can also become MORE expensive when rates increase.
Use with Caution
Although Adjustable Rate Mortgages are suddenly popular again in 2015 it’s important to keep in mind that tens of thousands of homeowners across the United States found themselves underwater with their mortgages after the collapse of the real estate market in 2008.
What Are The Key Attributes Of This Mortgage Loan?
When you start out with an adjustable rate mortgage loan you will first have an interest rate in the beginning which will be set by your lender then at a given period of time (usually 1, 3, 5, or 7 years) following that your mortgage interest rate will get reset to an interest rate which is comparable to the going mortgage interest rate.
Caps Can Limit Increases
Thankfully after the Real Estate collapse of 2008 we saw many new regulations put into place including caps for adjustable rate mortgages which can limit how much of an increase Adjustable Rate Mortgages can have each year.
Be Prepared For the Risk
If you’re considering going with an adjustable rate mortgage loan keep in mind that your monthly payment can increase FAST if mortgage interest rates increase quickly, so it’s best to not choose this mortgage loan option if you plan to be in your home long-term as interest rates are very low right now. If you plan to be in your home for just a few years, it could be beneficial at keeping your monthly payments lower until you sell.
Learn More
For more information on adjustable rate mortgage loans and referrals to a mortgage broker, or to view homes for sale across Portland, Oregon, contact EquityPoint Real Estate today by calling us at (503) 595-8800.