When Should You Consider An Adjustable Rate Mortgage

With 30-year fixed-rate mortgage rates reaching a one-year low in late February, it may make sense for certain homeowners to consider refinancing their adjustable-rate mortgages (arms). Here’s a guide to what you need to refinance as affordably as possible and also what you should know about how ARMs work.

Interest Rate Tied To An Index That May Change When this index goes up, interest rates on any loans tied to it also go up. An indexed rate is an interest rate that is tied to a specific benchmark with rate. variable interest credit products can be offered at the indexed rate or they may be. interest rate will change when the underlying indexed interest rate changes.

It can be intimidating to even think about getting an adjustable-rate mortgage (ARM). There’s so much to know. And there was that pesky little mortgage crisis a few years back where many people with ARMs got pretty burned. But don’t discount an ARM before you know all the ins and outs.

then an ARM should "absolutely be considered." For example, if a homeowner planned on being in a house for between three and five years, for a $200,000 home with 20% down, a 30-year fixed rate.

A 7 year arm is a loan with a fixed rate for the first seven years, and an adjustable rate every year thereafter. Because the interest rate can change after the first seven years, the monthly payment may also change.

How Much Do You Know About Password Security? Take This Quiz. Why Home Buyers Should Consider Adjustable-Rate Mortgages. fixed-rate mortgage, which has dominated the mortgage market since.