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What are the benefits of an Adjustable-Rate Mortgage (ARM)?

April 26, 2017adjustable-rate arm Benefits mortgage

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What are the benefits of an Adjustable-Rate Mortgage (ARM)?

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An ARM usually has a low introductory rate that stays fixed for an initial interest rate period, which ranges from 1 to 7 years. Then the rate will adjust up or down annually for the life of the loan based on a specified index. Some popular indexes used by mortgage lenders include the One Year T-Bill that adjusts weekly or the London Interbank Offered Rate (LIBOR) that adjusts daily, so it reacts more quickly to changes in the financial markets. An ARM is a good option if you believe interest rates will go down over the next few years or if you plan on staying in your home 5 to 7 years or less.