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Is an ARM loan risky?
Is an ARM loan risky? I'm considering taking out an ARM loan at a lower interest rate with the hope of refinancing before the rate increases. Is this a good idea to save money on interest now while the rates are high? Or is it too risky?
Asked By Brad | Bozeman, MT | 409 views | Finance Legal Info | Created 1 year ago
Answer(2)
Amanda Courtney
REP Realty Group
An Adjustable-Rate Mortgage (ARM) isn’t automatically risky, but it does depend on your long-term plans. ARMs usually start with a lower interest rate that adjusts after a set number of years. If you plan to sell or refinance before that adjustment, it can save you money. If you plan to stay long-term, you’ll want to understand how high that rate could go so there are no surprises down the road.
- 1 month ago
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Julianne Clark | Your Lowcountry Compass
Charter One Realty
The risk assessment depends on you and your long term goals. An ARM can be a great tool if approached in the correct way. Do your research to determine what the financial saving may be and the risk involved if the rates change up or down. Find a local lender (or two) that will be straightforward with you about the program and not just try to sell you a loan. Anticipating mortgage rates changes is like gambling or predicting the weather. There is some skill involved as well as an element of chance.
- 1 year ago
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