Adjustable Rate Mortgages are a gamble; if you don’t have the stomach for financial risk it’s pretty easy to find yourself in over your head. If you don’t like the idea of not knowing how much your mortgage payment will be five or ten years from now, choosing an Adjustable Rate Mortgage might not be right for you. On the other hand, the average homeowner refinances their mortgage every 5-7 years. Homeowners who leverage Adjustable Rate Mortgages for the short term can save thousands of dollars in mortgage interest on their loans.
If the thought of rising mortgage payments gives you butterflies in your stomach, you probably shouldn’t consider an Adjustable Rate Mortgage, especially if your loan representative is trying to talk you into one. Mortgage lenders often try and steer borrowers into Adjustable Rate Mortgages when their fixed rate offerings are not competitive.
Adjustable Rate Mortgages do have safety features built in them to help you avoid payment shock; however, it is important that you fully understand what you’re getting into before opting for this riskier mortgage loan. If risk isn’t your cup of tea, a fixed rate mortgage could help you avoid a financial nightmare.