Adjustable-rate mortgage loan (ARM Loan) is a term loan option where the interest rate can change periodically after the initial fixed-rate period. After this introductory period, the interest rate associated with the mortgage loan is susceptible to increases or decreases based on market fluctuations, ultimately affecting your monthly mortgage payment.
Most consumers choose to go with a fixed-rate mortgage over an adjustable-rate mortgage (ARM loan), because of the predictability that is baked into a fixed interest rate over the course of the loan.
However, if mortgage rates in the market are relatively high at the time you are home shopping, or if you know that you are only going to live in the home for a few years (fewer than the length of the introductory fixed-rate period of the ARM you are considering), then an ARM loan might be the right home loan solution for you.
As always, though, it is important to weigh the pros and the cons of fixed-rate mortgage programs vs. ARMs with your HappyDog mortgage advisor, as every individual’s situation is unique.
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Comparison
We have described the differences between the two types of mortgage loans at length, but here are the highlights
