What are adjustable-rate mortgages?
Because not all home buyers and homeowners have have the income necessary to buy the type of home they are wanting, conventional and FHA loan products offer them an ARM (adjustable-rate mortgage) option. Taking after its name, the fundamental difference between an ARM and a fixed-rate mortgage is the variability of the interest rates that come with the loan. ARM products have a lower start rate, which can allow a home buyer to qualify to finance a higher purchase price. Every ARM comes with an initial fixed rate period that can range from one year to ten years. When this fixed rate period ends, the annual interest rates then change — it’s called a “reset” — and fluctuate, depending largely on the economy’s workings. These types of ARM products are very risky and should be avoided whenever possible. What are other advantages of FHA loans? An FHA loan is generally more flexible and affordable than conventional home loans, with lower down payments and more forgiving credit guidelines. I
