| When Does an Adjustable Rate Mortgage Make Sense? |
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After 2005, as the mortgage market began its historic collapse, the Adjustable Rate Mortgage (ARM) received a lot of negative press. In fact, it seems that the ARM has received the majority of the blame for the market collapse. An ARM is sometimes the correct mortgage choice, but overall it tends to be the wrong choice in so many circumstances. ARMs come in all shapes in sizes, some adjust once a month, some once a year. Some are fixed for as long as 10 years before they begin adjusting, some adjust from day 1 (think Option ARM). So to determine which ARM type, if any, is right for you, you'll need to ask yourself the following Questions: 1. How long do you plan on staying in the house? This is important as to determine the length of ARM you may need. For example, if you plan on staying in your house for a short period of time, say 2 years or so, get a 3 year ARM. You'll pay less than 30 year fixed mortgage and you'll be out of the house by the time it adjusts. Obviously, it is imperative that you create a realistic time frame.
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